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By Hyunjoo Jin and Joyce Lee
SEOUL (Reuters) – As Tesla Inc accelerates the transition to electric cars, Hyundai Motor’s staunch suppliers have turned to “foreign” in search of portions, but now the South Korean automaker’s source company, Mobis, is entering the game.
Hyundai Mobis is in talks with two global automakers to get electrified parts, Reuters told its executive leader, hoping to increase volume and prices.
This resolution is a direct reaction to corporations such as Volkswagen and Tesla that have competed with suppliers hyundai had worked with for decades.
“We didn’t have to supply other corporations because we were busy keeping up with Hyundai’s growth. Now that’s changed,” said Ahn Byung-ki, senior vice president of electric powertrain operations at Hyundai Mobis.
“If we increase outdoor sales, overall costs will fall. This will bring advantages for all of us: us, global corporations and Hyundai,” said Ahn, who in the past developed eco-friendly cars at Hyundai Motor.
Hyundai Mobis, whose Hyundai Motor Group president Chung Mong-koo is the individual shareholder, derives more than 90% of its profits from the parent ship.
Ahn said lower electric vehicle (EV) prices are key to competing with less expensive unsubsidized gasoline cars, especially as Chinese rivals underestimate Hyundai and Tesla accelerates the industry’s transition to electric vehicles.
He said Mobis expected to get orders from some global automakers earlier this year, marking its first agreement to obtain electrified powertrains, has provided other electric or gasoline car parts to Fiat-Chrysler and others.
Hyundai suppliers can take advantage of Hyundai’s traditional joy in creating eco-friendly cars, he said, putting them ahead of their diesel-focused European peers.
Hyundai Motor and its subsidiary Kia Motors ranked third in global sales of battery electric vehicles last year, Tesla and Renault-Nissan, according to researcher LMC Automotive.
Hyundai Motor Group’s heir and de facto leader Euisun Chung recently said Hyundai aims to maintain more than 10% of the electric vehicle market by 2025.
Logistics subsidiary Hyundai Glovis Co Ltd, which counts Euisun Chung as its largest shareholder, has also expanded its Hyundai consumers to Tesla and Volkswagen to ship cars to all continents.
(GRÁFICO: Hyundai suppliers seek to diversify against replacement: https://fingfx.thomsonreuters.com/gfx/editorcharts/xklpynkejvg/index.html)
SEARCH FOR SURVIVAL
Like many Korean circles of relative conglomerates, or chaebol, the Hyundai Group is deeply committed to vertical integration, with subsidiaries producing key parts and even steel. Family members, assistants and other family members of the company have established key suppliers.
However, after years of slow growth, Hyundai-Kia’s production volume began to decline in 2016, affecting suppliers and leading them to less reliance on Hyundai.
“As the expansion slowed, Hyundai told suppliers to do so on their own,” said Lee Hang-koo, principal investigator at the Korean Institute of Industrial Economy and Commerce.
Hyundai Hanon Systems, which depends on the Tesla Model 3 and Volkswagen ID3, generates more than part of its profits from non-Hyundai customers.
Myoung Shin Co Ltd, founded through a former confidant of legendary Hyundai founder Chung Ju-yung, planned to manufacture electric cars for Chinese startup Byton after the acquisition of GM’s closed plant in Korea, creating a possible festival with Hyundai, a key customer. A subsidiary also stamps hot parts of Tesla for the Style 3 body.
But the pandemic hit Byton hard, delaying Myoung Shin’s plan to launch Byton’s M-Byte-style pilot production this year, said one user with the subject, speaking on anonymity due to the sensitivity of the subject.
“It’s not easy to trust Hyundai,” he said. ($1 – 1,185,3800 won)
(Information through Hyunjoo Jin and Joyce Lee; additional information from Ju-min Park. Edited through Gerry Doyle)