Hyundai Motor, the world’s third-largest automaker by sales, announced an ambitious plan on Wednesday, targeting annual global sales of 5.55 million vehicles by 2030—a 30% increase from its 2023 sales figures. This bold move comes as the South Korean giant shifts its strategic focus towards hybrid vehicles in response to a noticeable slowdown in global electric vehicle (EV) demand.

While the global automotive industry has been rapidly transitioning toward electrification, recent trends indicate a deceleration in the adoption of fully electric vehicles. Hyundai, recognizing this shift, has decided to double its hybrid lineup to counteract the plateauing EV demand, particularly in key markets like North America. Hyundai Motor President and CEO Jaehoon Chang highlighted this trend, stating, “Recently, the speed of conversion to electric vehicles has been slowing. As a result, demand for hybrids is increasing, and hybrids are becoming a basic option rather than an alternative to internal combustion engines.”

Doubling Down on Hybrid Vehicles

To capitalize on the rising demand for hybrid vehicles, Hyundai plans to significantly expand its hybrid lineup from the current offerings to 14 models. This expansion is expected to cater to the growing consumer interest in hybrids, particularly in markets where EV infrastructure and consumer readiness may not yet be fully mature. Although Hyundai did not specify the exact timeline for the release of these new hybrid models, the company has made it clear that hybrids will play a central role in its medium- to long-term strategy.

The company’s commitment to hybrids is further evidenced by its plans to start producing these vehicles at its new plant in Georgia, U.S., as early as the first quarter of 2026. According to Hyundai’s global Chief Operating Officer Jose Munoz, approximately one-third of the plant’s production capacity could be dedicated to hybrid vehicles when the factory reaches full capacity. This move aligns with Hyundai’s strategy to meet the increasing hybrid demand in North America, one of its most critical markets.

Introducing Extended-Range Electric Vehicles (EREVs)

Hyundai is not only expanding its traditional hybrid offerings but also venturing into a relatively new segment—extended-range electric vehicles (EREVs). This innovative segment, which is already popular in China, combines the benefits of electric vehicles with the flexibility of a gasoline engine that acts as a power bank, recharging the batteries when they run low. Unlike plug-in hybrids, which have limited electric-only range, EREVs feature larger battery packs and can operate on electricity alone for extended distances.

Hyundai plans to begin mass production of EREV models in North America and China by the end of 2026. These vehicles are expected to offer significant price competitiveness over fully electric vehicles, with an impressive driving range of over 900 km (559 miles) when fully charged. Hyundai hopes that EREVs will serve as a critical bridge to full electrification, particularly in markets where charging infrastructure is still developing.

In China, a market where Hyundai has faced intense competition from domestic automakers, the company aims to sell 30,000 EREV units by focusing on compact models. Meanwhile, in the U.S., Hyundai targets sales of 80,000 EREV units, initially rolling out large SUV models and the Genesis luxury brand.

Financial Strategy and Shareholder Returns

In addition to its product strategy, Hyundai also unveiled a robust financial plan aimed at enhancing shareholder value. The company announced that it would buy back up to 4 trillion won ($3 billion) of stock between 2025 and 2027 and would increase its quarterly dividends to a minimum of 2,500 won per share. This shareholder return package, which would return 35% of Hyundai’s profits to shareholders—up from the current policy of 25%—was well-received by the market, with Hyundai’s shares surging by 5% following the announcement.

Hyundai’s Chief Financial Officer Seung Jo Lee explained that the improved shareholder return policy would be funded by the company’s operations, as Hyundai targets a 9-10% operating margin by 2027 and over 10% by 2030. “By launching hybrids, EVs, EREVs differentiated from other brands, we plan to improve both average profitability and operating margins for each powertrain,” Lee said. He further emphasized that Hyundai would continue to pursue a profit-oriented strategy to achieve these ambitious financial goals, which would, in turn, support the expansion of the shareholder return policy.

Future Outlook and Global Ambitions

Hyundai’s comprehensive strategy not only focuses on immediate product expansion and financial returns but also includes long-term growth plans. The company reaffirmed its EV sales target of 2 million units by 2030 while raising its hybrid sales goal by 40% to 1.33 million units by 2028. These targets are part of Hyundai’s broader vision to remain competitive in a rapidly evolving automotive landscape.

Moreover, Hyundai is preparing for an initial public offering (IPO) of its India operations, from which it expects to raise $2.5-$3 billion. The proceeds from this IPO will be strategically allocated to further enhance Hyundai’s global operations, with more details to be announced once the deal is finalized.

In conclusion, Hyundai Motor is positioning itself to navigate the complexities of a dynamic automotive industry by diversifying its product offerings and enhancing shareholder value. The company’s shift towards hybrids and the introduction of EREVs demonstrate its adaptability and commitment to meeting changing consumer demands. With ambitious sales targets, a focus on profitability, and a robust financial strategy, Hyundai is poised to maintain its leadership position in the global automotive market.

(Adapted from Investing.com)