Same-Day Analysis: Hyundai previews new IONIQ compact car with choice of electric powertrains; South Korean ministry reveals five-year green car plan

09 Dec 2015 IHS Markit Automotive Expert

The South Korean government has revealed its five-year "green car" development plan, which aims to have as many as a million environmentally friendly vehicles on its roads by 2020. The plan coincides with the latest development at domestic automaker Hyundai, which has previewed the all-new IONIQ with a choice of three electric powertrains.

IHS Automotive perspective

  • Significance: Hyundai has teased an image of the new IONIQ compact car, which will feature a choice of electric, gasoline/plug-in electric hybrid, or gasoline/electric hybrid powertrain. Hyundai's latest model reveal coincides with the South Korean government's ambitious plans to have as many as one million "eco-friendly" cars on its roads by 2020.
  • Implications: Based on an exclusive new platform, Hyundai is planning to begin sales of the model in South Korea by January 2016. Meanwhile, the South Korean government's latest programme aims to lift the market share of the eco-friendly vehicles from the current 2% to as much as 20% of all new vehicles sold in the country by the target year.
  • Outlook: Despite its late entry into the segment, which is predominantly occupied by well-established Japanese automakers in global markets, Hyundai is accelerating its eco-friendly car launches in a bid to meet emissions regulations. Having set aside a total investment of KRW11.3 trillion (USD9.7 billion) until 2018 for the development of eco-friendly vehicles, Hyundai hopes to cement its position in the segment through sustained research and development, along with a supportive infrastructure in the domestic as well as overseas markets.

Hyundai has released a teaser image of its new IONIQ compact car, which will be made available for global markets with a choice of three hybrid/electric powertrains. According to a company statement issued yesterday (7 December), the IONIQ will be available with all-electric, plug-in electric/gasoline (petrol) hybrid, and gasoline/electric hybrid powertrain options. Hyundai claims that the IONIQ will be the first car from any manufacturer to offer customers these three powertrain options in a single body type. The all-electric version of the IONIQ will be powered by a high capacity lithium-ion battery, while the electric motor is expected to be joined by a gasoline engine for the plug-in hybrid electric-vehicle (PHEV) version. The hybrid variant is expected to use a gasoline engine to charge the on-board battery. The automaker did not specify the type of battery that will be deployed in the PHEV and the hybrid variants, and details of the gasoline engine that will be used in the new IONIQ, although the automaker recently revealed a new engine exclusive to its hybrid line-up, which is expected to power the IONIQ.

Woong-Chul Yang, the head of research and development centre at Hyundai said, "Hyundai Motor has a heritage of building innovative, fuel-efficient vehicles, so we are proud to advance our eco-friendly car line-up with the introduction of IONIQ. Our vision for future mobility focuses on choice, with a variety of powertrain options to suit customers' varied lifestyles, without compromising on design or driving enjoyment. IONIQ embodies Hyundai Motor's vision to shift the automotive paradigm and future mobility; IONIQ is the fruit of our efforts to become the leader in the global green car market".

The model will make its global debut in South Korea during January 2016, and will eventually be introduced at the Geneva International Motor Show in Switzerland, followed by the New York Auto Show in the United States, both in March 2016.

South Korean government reveals five-year "green car" plan

In a related development, the South Korean government has revealed a five-year "green car" plan, which will run during 2016-20. The Ministry of Trade, Industry and Energy said in a statement that it aims to boost production of eco-friendly vehicles - including electric and hybrid vehicles - to as many as 920,000 units per annum (upa) by 2020 from the current level of just under 80,000 upa as of 2015. The country is aiming to have as many as one million eco-friendly vehicles on its roads by 2020 as part of its plan to reduce greenhouse gas emissions and generate new growth momentum for its automotive industry. The plan is to increase the domestic market share of such cars from the current 2% to nearly 20% of all new vehicles sold in South Korea by the target year. By vehicle type, the country aims to have about 820,000 hybrid electric vehicles, 200,000 electric vehicles (EVs), 50,000 PHEVs and 9,000 fuel-cell electric-vehicles (FCEVs)by 2020. The ministry said such changes can reduce the amount of greenhouse gases released into the atmosphere by 3.8 million tonnes per year, up significantly from the 200,000-tonne reduction initially planned for every year.

The ministry said that the government will set aside about KRW150 billion (USD128.4 million) for assisting research and development (R&D) of such vehicles. The government reportedly believes that the export demand for South-Korean built eco-friendly cars could rise from the current 50,000 upa to nearly 640,000 upa by 2020, with the combined export market value of such vehicles could hit nearly KRW18 trillion by the target year. "The goal is to create a full-fledged market for eco-friendly cars by 2020… R&D emphasis will be placed on battery performance, electric drive systems and better climate control for vehicle occupants," the ministry said in a statement. The ministry said that the R&D focus of such vehicles will be laid on improving the battery pack capacity from the current 27 kilowatt-hour (kWh) to 54 kWh, with energy intensity of electric motors also to be improved by about 10%. "In the past five years, eco-friendly cars sales have been growing 20% annually, which is six-times faster than growth reached for conventional motor vehicles… By 2030, roughly half of all cars sold around the world will be eco-friendly cars", the ministry said. The government is also looking to establish nearly 1,400 EV charging stations throughout South Korea by 2020.

Outlook and implications

Hyundai is South Korea's biggest carmaker and the world's fifth largest automaker by volume, according to IHS Automotive data. It has been taking various strategic measures to improve its brand image, with an increasing focus on luxury cars combined with a strategic focus on the development of eco-friendly cars such as EVs, hybrids, and FCEVs, under its eco-focused "Blue Drive" strategy.

Hyundai and its affiliate Kia announced KRW4.1 trillion of investment in eco-friendly projects in 2009, to help elevate their position in the "green" vehicle market. Of the total, about KRW1.4 trillion is being spent on the development of fuel-efficient engines, and around KRW2.2 trillion is being directed towards the development of hybrid and hydrogen fuel-cell vehicles. At the start of 2015, the wider Hyundai automotive group announced a further KRW81 trillion in new investments for eco-friendly technologies and new production investment for the next four years. Of this total, as much as KRW11.3 trillion will be routed towards developing future-oriented technologies, including new materials, and to develop eco-friendly vehicles such as hybrid electric cars and FCEVs. In the smart car field, the Group is planning an exclusive investment of KRW2 trillion to develop and procure autonomous driving and vehicular IT functions.

Hyundai's green car development programme also includes EVs and FCEVs. Hyundai transformed the i10 into a pure EV called the BlueOn, although the model has not made it to the retail market as yet. Hyundai offers hybrid versions of its Grandeur and popular Sonata sedan in global markets and recently added a plug-in to its Sonata line-up. In addition to its growing interest in hybrid car development, Hyundai continues to believe that FCEVs will grow in popularity globally and has invested heavily in this technology, developing a fuel-cell stack, power electronics, and other parts in-house. The automaker began mass production of its first hydrogen-powered vehicle, the Tucson ix35, in 2013, and began sales in 2014. The automaker has ambitious plans for such vehicles in South Korea as well as global markets, with domestic sales target of 10,000 units by 2025 . As well as these, Hyundai is reportedly developing a self-driving version of its Tucson, named the "R-Car", as well as the self-driving variant of its Genesis sedan. The automaker had previously revealed its intention to introduce autonomous technology in its vehicles in a "phased manner" by 2020.

The Hyundai IONIQ will compete against the popular-selling Toyota Prius hybrid and the Nissan Leaf EV in their respective segments. IHS Automotive identifies the new IONIQ to be a C-segment hatchback model, code-named as the "C-Green" in our data. The model will be built on Hyundai's AD platform at Hyundai's Ulsan plant in South Korea, which will also underpin Kia's upcoming new eco-car model code-named "C-HEV" . Hyundai's IONIQ will begin sales in South Korea, along with 20 other global markets including the US, which is forecast to be its top-selling market, along with Canada and the UK, among others. We project annual sales of the Hyundai IONIQ to hit 33,010 units in 2016, maintaining average volumes of nearly 47,000 units each year until the end of this decade.

About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. Further components of this service include competitor and country intelligence. Get a free trial.


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