Construction is underway for Hyundai Motor Group Metaplant America in Georgia, in this file photo released by the state government of Georgia, Feb. 26. The plant was initially aimed at manufacturing only electric vehicles (EVs), but the carmaker decided to add production lines for hybrid cars amid falling demand for EVs and growing demand for hybrid cars. Yonhap
Hyundai Motor and Kia will speed up their ongoing portfolio restructuring to focus more on hybrid cars, as former U.S. President Donald Trump displays a strong anti-electric vehicle (EV) stance amid a growing likelihood of him winning another term as president for the world’s largest economy, according to analysts, Sunday.
Trump's pledge contrasts with the Inflation Reduction Act (IRA), the primary policy initiative of the Joe Biden administration. One of the key aspects of the IRA is to offer increased tax credits for electric vehicles (EVs) that use batteries with key materials extracted or processed within the U.S. or in countries with free trade agreements with the U.S.
However, Trump is stepping up his rhetoric to scrap the IRA, calling Biden’s pro-eco-friendly vehicle drive a “green new scam.”
This bodes ill for the two Korean automakers whose strategic focus has in recent years been on increasing their EV market share in the U.S. Market analysts expected the companies to redirect their sales focus toward hybrid vehicles and ones powered by internal combustion engines amid the growing risks of a Trump presidency.
“Even if Trump pushes ahead with a pledge to abolish EV subsidies, the Korean carmakers will be able to tackle the upcoming risks by mixing production for hybrid cars (at their EV manufacturing facility in the U.S.),” Hana Securities analyst Song Sun-jae said.
U.S. President Joe Biden, right, listens as Republican presidential candidate and former U.S. President Donald Trump speaks during their debate in Atlanta, Georgia, U.S., June 27. Reuters-Yonhap
Reflecting on the escalating Trump uncertainty and the ongoing slowdown in the EV industry, Hyundai Motor Group is building a hybrid production line at its once-EV-dedicated Hyundai Motor Group Metaplant America (HMGMA) in Georgia. The facility will start operations around October.
Other analysts also echoed a similar note, saying that local carmakers are required to offset weakening sentiment for EVs by increasing sales for hybrid vehicles.
“EV sales in the U.S. fell by 3.8 percent in June from a year earlier,” Han Byung-wha, an analyst at Eugene Investment & Securities, said. “Most overseas carmakers, such as Tesla, Volkswagen, Mercedes, suffered a slowdown in their EV sales, but sales for typical hybrid cars surged by 32.5 percent during the same period, which demonstrates customers’ preference is shifting from EVs to hybrid cars. If Trump regains power, EV sales are feared to suffer an additional fall.”
In a first-quarter regulatory filing in April, Hyundai Motor shared its plan to equip all of its auto lineups with hybrid engines amid surging demand for the vehicles. The automaker also revealed that it had begun developing hybrid systems for small cars.
As hybrid vehicles are more profitable than EVs, Hyundai Motor and Kia are expected to have generated record sales in the second quarter on soaring hybrid sales. According to data from market tracker, FnGuide, the combined operating profit of the two carmakers is projected to reach around 7.87 trillion won ($5.65 billion) between April and June, up 3.01 percent from the previous year.
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