April 26, 2024

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[THE INVESTOR] Hyundai Motor is expected to use Chinese batteries for the electric model of its top-selling Elantra Yuedong that will debut next year, possibly in response to the Chinese government’s subsidy cuts for EVs using Korean batteries.

According to local daily JoongAng Ilbo on Feb. 10, Beijing Hyundai Motor, the carmaker’s Chinese joint venture with Beijing Automotive Holdings, will start the car's production in the latter half of this year with plans to launch the model early next year.

A Hyundai spokesperson in Seoul declined to confirm the report. 

The Yuedong EV will become Hyundai’s first EV in China, the world’s largest EV market where the Korean auto giant ranks third in terms of sales.

Unlike Hyundai’s other EV models that are powered by Korea’s LG Chem, the Yuedong EV will be equipped with China-made batteries.

Amid growing diplomatic tensions over Korea’s planned deployment of the US-made missile defense system THAAD, Korean battery makers LG Chem and Samsung SDI have failed to receive government subsidies for EV purchase.

Without the cash incentives that amount to 25,000 yuan (US$3,635), Hyundai vehicles will lose the price war against their cheaper Chinese rivals that are powered by compatriot battery makers.

The Chinese government also requires eco-friendly cars -- electric, hybrid and plug-in hybrid cars -- to make up more than 8 percent of all new cars from the carmakers that manufacture in the country.

There was speculation that Hyundai could delay the EV launch to wait for LG Chem to get subsidy certification but the carmaker seems to have no choice but to speed up the launch. If not, the government penalty can reach up to 140 billion won (US$121.90 million) annually, sources say.

By Ahn Sung-mi (sahn@heraldcorp.com)