Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

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

08/24/2020 | 07:00pm EST
The logo of Hyundai Mobis is seen during the 2019 Seoul Motor Show in Goyang

As Tesla Inc accelerates the shift to electric cars, Hyundai Motor'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 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 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, which counts Euisun Chung as its biggest shareholder, has also expanded customers from Hyundai to Tesla and Volkswagen to transport vehicles across continents.

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, 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 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.

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

(Reporting by Hyunjoo Jin and Joyce Lee; Additional reporting by Ju-min Park. Editing by Gerry Doyle)

By Hyunjoo Jin and Joyce Lee


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
HANON SYSTEMS -1.52% 16200 End-of-day quote.45.29%
HYUNDAI CORPORATION -0.33% 14950 End-of-day quote.-16.48%
HYUNDAI GLOVIS CO., LTD. -1.37% 179500 End-of-day quote.25.52%
HYUNDAI MOBIS CO.,LTD -0.82% 240500 End-of-day quote.-6.05%
HYUNDAI MOTOR COMPANY -0.54% 182500 End-of-day quote.51.45%
KIA MOTORS CORPORATION 1.67% 60800 End-of-day quote.37.25%
MS AUTOTECH CO LTD End-of-day quote.
RENAULT 1.45% 34.73 Real-time Quote.-18.84%
TESLA, INC. -2.73% 568.82 Delayed Quote.598.92%
TOYOTA MOTOR CORPORATION 0.87% 7079 End-of-day quote.-8.23%
VOLKSWAGEN AG -0.39% 146.78 Delayed Quote.-16.39%
Latest news "Economy & Forex"
05:49pALMA ADAMS : Adams, Lowey Introduce the Public Safety and Wildlife Protection Act
PU
05:46pUganda's GDP Contracts under COVID-19, Investing in Uganda's Youth Key to Recovery
PU
05:46pUGANDA ECONOMIC UPDATE : Uganda Can Benefit from the Demographic Dividend by Investing More in Education, Health
PU
05:46pWORLD BANK : Trade Watch
PU
05:46pMONITORING SMALL-SCALE CROSS-BORDER TRADE IN AFRICA : Issues, Approaches, and Lessons
PU
05:41pNATIONAL BANK OF SERBIA : Bank Lending Survey – Third Quarter 2020
PU
05:19pU.S. Congress passes bill that could delist Chinese stocks from U.S. markets
RE
05:11pFAO FOOD AND AGRICULTURE ORGANIZATION OF UNI : and partners advocate for inclusive food systems to combat rural poverty
PU
05:11pEU faces French regulator call to fix derivatives to limit Brexit blow
RE
05:11pBrexit trade deal could come in the next few days, BBC says
RE
Latest news "Economy & Forex"