Hyundai pins hopes on electric car

Hyundai Motor is going for broke on the commercialization of an entirely new electric vehicle, and the clock is set for mass production in 2018.

Hyundai is planning an entirely new vehicle, from engine design to transmission, like Tesla’s Model S.

Kia Motors’ Ray, in contrast, is an adaptation of an existing model.

This is the first time in four years that Hyundai Motor has reignited its ambition to develop an exclusively electric-powered vehicle. In 2010, the automaker introduced a subcompact all-electric vehicle, the BlueOn, but it was never mass produced.

“We started our research and development last year, under the order of Chairman Chung Mong-koo, to roll out a new, exclusively electric vehicle by 2018,” said a high-ranking official at the Korean automaker.

“For the development of a mass produced all-electric-powered vehicle we put two Tesla Model Ss at our Namyang research lab last month,” the official said.

One of the Tesla cars is used for performance tests, while the other was ripped apart for research and development.

The automaker’s exclusively electric car is expected to be a subcompact like BMW’s first electric vehicle, the i3.

“Hybrid cars or cars that install electric-powered gears in existing models are stepping-stones that save development costs,” said Byun Young-ho, an automotive professor at Yeoju Institute of Technology. “A purely electric vehicle maximizes performance and efficiency with a completely new design starting with the location of the battery, which is a key component.”

Hyundai Motor’s decision comes at a time when the electric-vehicle market is expected to grow substantially. Development of such a vehicle has become crucial for the fortune of the automaker.

The Korea Automotive Research Institute projects that nearly 2.7 million electric vehicles will be sold globally in 2020, up from 70,000 in 2012.

Tesla, which introduced a $63,000 Model S last year, sold over 15,000 units in its first nine months.

The U.S. automaker has plans to introduce a more affordable version next year, dubbed the Model E, with a price in the range of $30,000.

BMW will be rolling out the i3, its first electric vehicle, for commercial sale in global markets in May, including Korea.

The basic price of the subcompact is 35,000 euro ($47,840), which is roughly the same price as a midsized sedan. The price could fall depending on each country’s subsidy for purchasing environmentally friendly vehicles.

Hyundai Motor is considered slightly late to the game. Even in the local market, it may be losing the race already to Renault Samsung Motors.

In October, 160 electric vehicles were sold to Jeju residents as a pilot program for the technology. The Jeju government accepted requests by potential buyers and gave hefty government subsidies that made the vehicle affordable.

Although Renault Samsung’s SM3 ZE was more expensive at 20 million won ($18,651) than Kia Motors’ Ray, which costs 12 million won, 107 orders were placed for the SM3 and only 39 orders for the Ray. This gave Renault Samsung confidence that it has a leg up in the electric-vehicle race even if it is dwarfed in the overall market by the two automotive giants.

Automobile companies are not the only potential competitors facing Hyundai Motor.

Electronics manufacturers Samsung and LG Electronics pose a threat, especially in developing batteries for mass-produced electric vehicles.

The development of lighter, longer-lasting batteries by the electronics companies could dent the competitiveness of automakers.

This was evident at the Consumer Electronics Show in Las Vegas held earlier this month.

Although it was an electronics show, seven automakers including Mercedes-Benz and Audi set up booths displaying their own electronic components.

The market for the electronic automotive parts is expected to be worth $301 billion in 2020.

Another challenge facing the Korean automaker is in infrastructure. The traveling distances of existing electric cars on a single fuel charge is roughly 150 kilometers (93 miles).

However, aside from in Jeju, which has been a testing ground for electric cars, finding a battery charging station on Korean roads is currently impossible.

“Due to a lack of infrastructure, the company that develops a battery or a transmission that would allow the car to travel more than 300 kilometers will come up as victor among its competitors,” said an industry insider.

BY lee ho-jeong [ojlee82@joongang.co.kr]