Hyundai boosts investment in electric vehicles to $28 billion to cut operations in China

Hyundai Motor will increase average annual investment in electrification by almost two-thirds — to $28 billion — over the next decade and continue to restructure its business in China as part of a broader strategy to increase sales of electric vehicles. On its annual investor day on Tuesday, the South Korean automaker said it had also raised its electric vehicle sales target to 2 million units by 2030 from 1.87 million.

That would represent about a third of the total car sales, up from 8% expected this year. “As global demand for electric vehicles grows faster than market predicts, Hyundai Motor is raising its 2030 sales target,” — says in the statement.

To achieve this Hyundai plans to increase local production of electric vehicles in three key markets US, Europe and South Korea as more countries provide tax breaks and incentives for locally produced vehicles.

In the United States, the largest market, production electric vehicles will account for three quarters of total vehicle production by 2030 from 0.7% currently.

While the company has raised sales targets for electric vehicles in its core markets, Hyundaisaid it will continue to restructure its business in China to focus on profitability. HyundaiCEO Chehong Chang told investors that China, the world's largest auto market, was very profitable until 2016, but now it's the biggest risk as the automaker has lost market share to nimble domestic competitors.

Hyundai sold one plant in China in 2021 and plans to sell two more, including one it closed last year and another it plans to close this year. The remaining two other factories will be further rationalized and used for export to emerging markets.

Its product line in China will also be reduced from 13 to eight, focusing on high-end models and SUVs, including luxury brand Genesis. Hyundai Motor plans to invest 9.5 trillion won ($7.4 billion) over the next 10 years to increase its competitiveness in batteries and develop next generation batteries.

Hyundai Motor said it plans for the first time to introduce competitive lithium iron phosphate (LFP) batteries, a cheaper alternative to lithium-ion batteries that have spurred the adoption of electric vehicles in China, approximatelyin 2025.