Key Hyundai affiliate aims to muscle into electric vehicle market as longtime suppliers turn to outsiders

MS AUTOTECH

25/08/2020 01:41

By Hyunjoo Jin and Joyce Lee
    SEOUL, Aug 25 (Reuters) - As Tesla Inc  TSLA.O  accelerates
the shift to electric cars, Hyundai Motor  005803.KS 's loyal
suppliers have increasingly turned to "outsiders" for parts -
but now the South Korean carmaker's own supply company, Mobis,
is plunging into the game.
    Hyundai Mobis  012330.KS  is in talks with two global
automakers to supply electrified parts, its executive told
Reuters, as it hopes to boost volume and lower prices.
    The move is a direct response to companies such as
Volkswagen  VOWG_p.DE  and Tesla muscling in with suppliers with
whom Hyundai had worked for decades.
    "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, who previously developed eco-friendly cars at Hyundai
Motor.
    Hyundai Mobis, in which Hyundai Motor Group chairman Chung
Mong-koo is the biggest individual shareholder, gets more than
90% of its revenue from the mothership. 
    Ahn said reducing electric vehicle (EV) costs is key to
competing with cheaper gasoline cars without subsidies,
especially as Chinese rivals undercut Hyundai, and Tesla
accelerates the industry's shift to EVs.
    He said Mobis hoped to win orders from a couple of global
automakers as early as this year, marking its first deal to
supply electrified powertrains, although it has supplied other
parts of EVs or gasoline cars to Fiat-Chrysler and others.
    Hyundai suppliers can leverage Hyundai's longtime experience
with developing eco-friendly cars, he said, which puts them
ahead of European peers who have focused on diesel.
    Hyundai Motor and its affiliate Kia Motors ranked third in
global battery electric vehicle sales last year, behind Tesla
and Renault-Nissan, according to researcher LMC Automotive. 
    Hyundai Motor Group's heir and de facto leader, Euisun
Chung, recently said Hyundai is aiming to have more than 10% of
EV global market share in 2025.  urn:newsml:reuters.com:*:nL4N2FC054
    Logistics affiliate Hyundai Glovis Co Ltd  086280.KS , which
counts Euisun Chung as its biggest shareholder, has also
expanded customers from Hyundai to Tesla and Volkswagen to
transport vehicles across continents.  urn:newsml:reuters.com:*:nS6N2DO006 
        
    SEEKING SURVIVAL
    Like many of Korea's family-owned conglomerates, or chaebol,
Hyundai Group is deeply invested in vertical integration, with
affiliates making key parts and even steel. Family members,
aides and others close to the company founded key suppliers.
    After years of breakneck growth, however, Hyundai-Kia's
production volume began trending down in 2016, hitting suppliers
and moving them to rely less on Hyundai.  
    "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  018880.KS , which supplies
parts to Tesla Model 3 and Volkswagen's ID3, generates more than
half of its revenue from non-Hyundai customers.
    Myoung Shin Co Ltd, founded by a former confidant of
Hyundai's legendary founder Chung Ju-yung planned to manufacture
EVs for Chinese startup Byton after acquiring GM's  GM.N  closed
factory in Korea, creating potential competition with Hyundai, a
key customer. An affiliate is also supplying hot-stamping parts
to Tesla for the Model 3's body. 
    But the pandemic hit Byton hard, delaying Myoung Shin's plan
to start pilot production of Byton's M-Byte model this year, a
person familiar with the matter said, speaking on condition of
anonymity because of the sensitivity of the matter.
    "It is not easy to reduce reliance on Hyundai," he said.
 urn:newsml:reuters.com:*:nL4N2E728G($1 = 1,185.3800 won)

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 (Reporting by Hyunjoo Jin and Joyce Lee; Additional reporting
by Ju-min Park. Editing by Gerry Doyle)
 ((jungyoon.lee@tr.com; +82 2 6936 1467;))