Hyundai misses boat as Jeju hosts big EV expo

Korea, striving to become a global leader in electric-vehicle adoption, will host its first exhibition dedicated to EVs. One notable absence: the nation’s largest automaker.

Hyundai Motor will skip the show because its first electric vehicle won’t be ready until 2016, according to the company. Instead, foreign automakers from Bayerische Motoren Werke AG to Nissan Motor will dominate the first International Electric Vehicle Expo that opens today on Jeju and was organized by Korea’s trade and environment ministries.

Hyundai’s absence presents an opportunity for foreign automakers to make inroads in a country where almost nine of 10 cars sold are Korean. The holdup to go green may also cost Hyundai as government plans to levy an emission tax on vehicles may undermine demand for gasoline-run Sonata and Genesis sedans, which are among the company’s most popular and profitable models.

“Hyundai has always been somewhat hesitant in developing eco-friendly cars,” said Kim Pill-soo, a professor of automotive engineering at Daelim College and adviser to the government. “For the next two or three years, Hyundai will have no choice but to just sit tight and watch its competitors have a party.”

Hyundai declined to comment on why it won’t be participating in the expo. The company hasn’t released specific details about its first EV model, according to an emailed response.

Lee Ki-sang, head of Hyundai and Kia’s joint research and development center for green-car technology, said the automaker recognizes that many countries are seeking ways to limit the environmental impact of autos and carmakers are betting their future on the right eco-friendly technology.

With no clear dominant green technology, Hyundai and smaller affiliate Kia, which share the same chairman, decided to have Hyundai focus on fuel-cell vehicles, while Kia develops EVs, he said.

Still, the first Hyundai EV model will be not be available until 2016. Kia has produced the Ray EV for government use since December 2011 and will start selling the new Soul starting next month.

At the Jeju expo, BMW will display its electric i3 and Nissan will show the Leaf. Other automakers will include General Motors with its Spark EV and Renault Samsung Motors.

In China, Hyundai’s biggest market by sales volume, the central government is promoting electric vehicles to help reduce air pollution.

The central government this year extended a subsidy program for EVs after adoption lagged behind targets amid lingering concerns about cost, reliability and convenience.

In the United States, the government set a goal in 2011 of doubling Corporate Average Fuel Economy, or CAFE, to 54.5 miles a gallon (23.2 kilometers a liter) by 2025. The U.S. efficiency push has brought legions of new hybrid plug-in cars, electric vehicles and models powered by fuel-saving gasoline engines to the market in the past three years.

Back in Korea, the government is pushing to lower vehicle emissions by offering various subsidies that can cut the price of a 40 million won ($37,500) EV by more than half. In April, the government may give details of a policy that will tax buyers of high-emission vehicles starting in 2015, according to a March 6 statement on the environment ministry’s website.

The purpose of the new policy is to increase the number of small cars and fuel-efficient cars like hybrids and EVs to reduce energy consumption, in a nation where 72 percent of vehicles are midsize and large, according to the ministry’s statement.

The government aims to have 1 million registered electric vehicles by 2020, according to the environment ministry. Jeju Island aims to have all vehicles there electric by 2030, according to Kim Dae-hwan, chairman of the expo’s organizing committee.

Last year, 61 percent of Hyundai sedans sold in Korea were midsize or bigger.

“The new policy will put considerable pressure on Hyundai and Kia,” Lee Sang-hyun, an analyst at NH Investment and Securities said. “They are behind on eco-friendly car development and depend on this market for a majority of sales of their mid-to-large cars.”

Bloomberg