Hyundai Motor will stop developing new diesel engines

Hyundai Motor Group's headquarters in Yangjae-dong, Seoul / Courtesy of Hyundai Motor Group

By Nam Hyun-woo

Hyundai Motor Group will stop developing new diesel engines, as part of the group's initiative to lower its reliance on internal combustion engines and swiftly transition to electric vehicles (EVs) and hydrogen fuel cell EVs.

Although the company will continue assembling diesel vehicles for a while and make improvements to existing engines, the bottom line strategy is to phase them out, according to sources at Hyundai Motor.

"It is a global automotive trend to stop developing new diesel engines," a source said. "However, this does not mean that Hyundai will end diesel vehicle production immediately, and the group will release updated versions of existing engines for a while."

Hyundai Motor Group currently has four diesel engines for passenger vehicles ― designated U for the i30, R for the Santa Fe, A for the Starex and S for the Veracruz ― and three for commercial vehicles.

Company representatives stressed that the group believes that transitioning to eco-friendly vehicles is the right move.

Hyundai Motor recently reorganized the powertrain research and development teams at its Namyang R&D Center. Previously, the center categorized its powertrain R&D teams based on types, such as gasoline and diesel, but it has disbanded those teams and reallocated researchers to new ones based on vehicle segments.

Sources familiar with the issue said this means that the group will depart from the conventional way of developing engines based on fuel types, starting with diesel engines, and focus on electric drivetrains. The group reportedly stopped developing new diesel engines starting late last year.

The eventual retirement of diesel engines at Hyundai Motor was widely expected, as the group seeks to swiftly transition to EVs and hydrogen fuel cell EVs. Hyundai stopped making diesel versions of the Grandeur, Sonata, i30 and Maxcruz in 2018.

One possible setback in retiring diesel engines was Hyundai's lineup of commercial vehicles, which are highly reliant on the high torque and low fuel prices of diesel engines. However, the group appears to have decided to quit diesel engine R&D sooner than expected following the positive responses the Porter 2 Electric cabover truck and the Xcient Fuel Cell truck received last year.

The group is also expected to gradually phase out gasoline engine vehicles. During an investor day event in December, the group said it will stop selling combustion engine vehicles in the U.S., Europe, China and other major markets in 2040, and will focus only on EVs.

The latest developments have raised expectations that the group will increase the number of hybrid and plug-in hybrid models and reduce the proportion of gasoline powered vehicles. But this will take time considering continuing demand for combustion engine vehicles in emerging markets.

As such vehicles are diminishing in importance for Hyundai, EVs and fuel cell EVs are playing an increasingly important role in the automaker's portfolio. Currently, the company has 15 eco-friendly models and plans to expand the number to 44 by 2025 to account for nearly 10 percent of the global EV market. Hyundai Motor recently released teaser images of the IONIQ 5, an electric CUV and the first of the IONIQ series, as well as other EVs that will be manufactured using the group's E-GMP EV platform.

Analysts said the vehicle's launch will likely take place as early as February, citing a leaked preorder form from Hyundai Motor Australia.

According to Eugene Investment & Securities analyst Lee Jae-il, the Australian unit stated that IONIQ 5's color selection will be available from Feb. 2 and production of the vehicle will start in the early first quarter of this year.

A teaser image of the Hyundai IONIQ 5 / Courtesy of Hyundai Motor Group

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