By Choi Sung-jin
Chinese government regulations on Korean batteries are adversely affecting Hyundai Motor’s efforts to export electric cars to China, industry sources said Friday.
Hyundai Motor, and sister company Kia Motors, plan to release plug-in hybrid electric vehicles (PHEVs) in China next year, but are unlikely to receive the Chinese government’s subsidy, ranging from 25,000 to 55,000 yuan (4.2 million won to 9.22 million won) a vehicle.
Without these, normal marketing of electric cars is all but impossible, they said.
LG Chemical, which supplies batteries to the two carmakers, is yet to win certification from the Beijing government. Global automakers that have also used batteries supplied by Korean makers, including from Samsung SDI, are reportedly considering switching to Chinese battery makers to access the world’s largest automobile market.
Beijing Hyundai, the Chinese offshoot of Korea’s largest carmaker in a joint venture with a local partner, plans to release its first PHEV model in China in April. Kia’s local chapter, Dungfeng Yueda Kia, will put its model into the Chinese market in October next year. Both models use LG Chemical’s batteries, which have not obtained Chinese certification.
China’s Ministry of Industry and Information Technology is revising its policy toward only subsidizing vehicles with batteries from certified makers.
LG Chemical and Samsung SDI failed the fourth certification screening on June 20. The Chinese ministry said it would receive applications for the fifth screening in August but is yet to release a detailed schedule. If LG Chemical’s batteries are excluded from subsidies, Hyundai and Kia will find it nearly impossible to launch their electric cars in China.
“In China, vehicles not receiving the government’s subsidies given to environment-friendly cars cannot make their debuts at all because of the huge gap in price competitiveness,” an industry executive said.
The two automakers are now in crisis. It is not easy for them to change their batteries to Chinese products, either. “It takes a couple of years at the least to replace the batteries of PHEVs and electric cars as it requires redesigning of the car models,” an auto industry official said. “Hyundai Motor Group will lose opportunities to advance to the Chinese market during that period.”
The Chinese electric car market is expanding rapidly. Sales, including PHEVs, have totaled 207,832 cars, compared with 193,439 in Europe and 115,000 in the United States.
Hyundai, which released Sonata’s hybrid car in China in June, has been preparing to put to market its first PHEV model next year.
In China, electric car subsidies differ depending on the mileage per recharge, ranging from 25,000 yuan for 100-150 km, to 55,000 won (250 km or longer). But Beijing gives 30,000 yuan to PHEV cars with mileage of 50 km or longer. Provincial governments have similar subsidy systems. Electric cars and PHEVs are also exempted from regulations on the issuing of license plates in large Chinese cities, including Beijing and Shanghai.
A bigger problem for Korean automakers is that the battery-related regulations will make it difficult for them to target the Chinese market with electric cars, including the Ioniq. That means Hyundai Motor Group’s strategy to recover its sluggish sales in China with environment-friendly cars could go awry, the industry sources said.
The situation is similar for other global automakers. GM, Volkswagen, Audi and PSA are also planning to release electric vehicle models in China next year, and most have batteries from LG Chemical and Samsung SDI.
Some foreign carmakers are reportedly considering switching to Chinese batteries. Hyundai is also thinking of using Chinese batteries in some of its models.
“As we know, Hyundai is developing a new electric vehicle model that is not based on the Ioniq platform, equipped with a Chinese battery, at its research lab in China,” an industry source said.