Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Key Hyundai affiliate aims to muscle into electric vehicle market as longtime suppliers turn to outsiders

Stock MarketsAug 24, 2020 08:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The logo of Hyundai Mobis is seen during the 2019 Seoul Motor Show in Goyang

By Hyunjoo Jin and Joyce Lee

SEOUL (Reuters) - As Tesla Inc (O:TSLA) accelerates the shift to electric cars, Hyundai Motor <005803.KS>'s loyal suppliers have increasingly turned to "outsiders" for parts - but now the South Korean carmaker's own supply company, Mobis, is plunging into the game.

Hyundai Mobis (KS:012330) is in talks with two global automakers to supply electrified parts, its executive told Reuters, as it hopes to boost volume and lower prices.

The move is a direct response to companies such as Volkswagen (DE:VOWG_p) and Tesla muscling in with suppliers with whom Hyundai had worked for decades.

"We were not able to supply to other companies because we were busy with keeping up with Hyundai's growth. Now this has changed," said Ahn Byung-ki, senior vice president of electric powertrain business at Hyundai Mobis.

"If we increase outside sales, overall prices will drop. This will benefit everyone - us, global companies and Hyundai," said Ahn, who previously developed eco-friendly cars at Hyundai Motor.

Hyundai Mobis, in which Hyundai Motor Group chairman Chung Mong-koo is the biggest individual shareholder, gets more than 90% of its revenue from the mothership.

Ahn said reducing electric vehicle (EV) costs is key to competing with cheaper gasoline cars without subsidies, especially as Chinese rivals undercut Hyundai, and Tesla accelerates the industry's shift to EVs.

He said Mobis hoped to win orders from a couple of global automakers as early as this year, marking its first deal to supply electrified powertrains, although it has supplied other parts of EVs or gasoline cars to Fiat-Chrysler and others.

Hyundai suppliers can leverage Hyundai's longtime experience with developing eco-friendly cars, he said, which puts them ahead of European peers who have focused on diesel.

Hyundai Motor and its affiliate Kia Motors ranked third in global battery electric vehicle sales last year, behind Tesla and Renault-Nissan, according to researcher LMC Automotive.

Hyundai Motor Group's heir and de facto leader, Euisun Chung, recently said Hyundai is aiming to have more than 10% of EV global market share in 2025.

Logistics affiliate Hyundai Glovis Co Ltd (KS:086280), which counts Euisun Chung as its biggest shareholder, has also expanded customers from Hyundai to Tesla and Volkswagen to transport vehicles across continents.

(GRAPHIC: Hyundai suppliers seek to diversify on change - https://fingfx.thomsonreuters.com/gfx/editorcharts/xklpynkejvg/index.html)

SEEKING SURVIVAL

Like many of Korea's family-owned conglomerates, or chaebol, Hyundai Group is deeply invested in vertical integration, with affiliates making key parts and even steel. Family members, aides and others close to the company founded key suppliers.

After years of breakneck growth, however, Hyundai-Kia's production volume began trending down in 2016, hitting suppliers and moving them to rely less on Hyundai.

"As growth slowed, Hyundai told suppliers to survive on their own," said Lee Hang-koo, senior researcher at Korea Institute for Industrial Economics & Trade.

Hyundai supplier Hanon Systems (KS:018880), which supplies parts to Tesla Model 3 and Volkswagen's ID3, generates more than half of its revenue from non-Hyundai customers.

Myoung Shin Co Ltd, founded by a former confidant of Hyundai's legendary founder Chung Ju-yung planned to manufacture EVs for Chinese startup Byton after acquiring GM's (N:GM) closed factory in Korea, creating potential competition with Hyundai, a key customer. An affiliate is also supplying hot-stamping parts to Tesla for the Model 3's body.

But the pandemic hit Byton hard, delaying Myoung Shin's plan to start pilot production of Byton's M-Byte model this year, a person familiar with the matter said, speaking on condition of anonymity because of the sensitivity of the matter.

"It is not easy to reduce reliance on Hyundai," he said.($1 = 1,185.3800 won)

Key Hyundai affiliate aims to muscle into electric vehicle market as longtime suppliers turn to outsiders
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email