Hyundai Mobis muscles into car parts market

With U.S. electric vehicle pioneer Tesla Inc accelerating the shift towards electric cars, Hyundai Motor suppliers have increasingly turned to “outsiders” for parts; but now Hyundai’s own supply company, Mobis, plans on plunging into this supply chain.

Hyundai Mobis is negotiating with two global automakers to supply electrified parts, said the company’s executive with an aim to boost volumes while lowering prices.

The development comes in the wake of Tesla and Volkswagen muscling in with suppliers with whom Hyundai had decades-worth of trade relations.

“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.

According to Ahn, trimming the price of electric vehicles (EV) is key in competing with cheaper but polluting gasoline cars, without taking subsidies.

Ahn is hoping that Mobis wins orders from at least a couple of global automakers later this year, for its electrified powertrains while it continues making parts for gasoline powered cars for Fiat-Chrysler and others.

Hyundai suppliers have an advantage since they can leverage Hyundai’s decades-long experience with developing eco-friendly cars, said Ahn; this placed it in front of its European peers, who have since long focused on diesel powered engines.

In 2019, Hyundai Motor and its affiliate Kia Motors ranked third in global battery electric vehicle sales, behind Tesla and Renault-Nissan, according to data research firm LMC Automotive.

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

The group’s logistics affiliate, Hyundai Glovis Co Ltd, has also expanded its client base, and transports vehicles, including car parts, for Hyundai, Tesla and Volkswagen across continents.

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

Following years of phenomenal growth, Hyundai-Kia’s production volumes saw a slow down in 2016, as a result of which suppliers expanded their base from Hyundai-focussed to others as well.

“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 car parts for Tesla’s Model 3 and Volkswagen’s ID3, generates more than 50% of its revenues from non-Hyundai customers.

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