Hyundai Motor, the nation’s largest auto maker, will start mass producing LF Sonata Hybrid models in its Beijing plant from January next year. Although the company is exporting and selling hybrid electric vehicles (HEVs) in the markets of China, the U.S., the Middle East and South America, it is the first time to locally produce them.
According to industry sources on Nov. 8, the company is highly likely to start the production of the models in its second Beijing plant in the Shunyi District.
The company made such a decision due to high tariffs. Hyundai Motor has been exporting the YF Sonata Hybrid to China from last year. However, the models have shown slow sales with high tariffs at 25 percent. When the Sonata Hybrid is exported at the price of 30 million won (US$26,270), its local price will skyrocket up to nearly 40 million won (US$35,026). This is why Hyundai Motor has sold only 130 HEVs in China until recently.
Hyundai Motor also has an intention to target the Chinese eco-friendly car market, which is expected to see a high growth potential in the future, as well as securing price competitiveness. The Chinese green car market, including HEVs, EVs and plug-in hybrid electric vehicles (PHEVs) has grown from 3,320 units in 2010 to 70,800 units last year. In a bid to tackle smog and environmental pollution, the Chinese government has come up with a road map that aims for annual sales of 10 million units of new energy cars, including EVs, by 2030, accelerating the boost in environmentally-friendly car sales.
Regarding this, Hyundai Motor Group Chairman Chung Mong-koo said at the meeting with Chinese Premier Li Keqiang on Nov. 1, “In order to keep pace with the Chinese government’s new energy car promotion policy, we are planning to begin mass production of HEVs in China, and actively expand our EV business in the country.” On this plan, the company is likely to produce its eco-friendly “AE” model, which is scheduled to be released in Korea early next year, in China in the future, following the LF Sonata Hybrid models. The AE is the world’s first green car with EV, HEV, and PHEV types.
Currently, Toyota continues to gain ground in the Chinese HEV market. With the Prius and Camry Hybrid models, Toyota posted 2,888 units in HEV sales in China in September, up 33 percent from the same period a year ago. The company has been exporting the Prius, which is produced in Japan and Taiwan, to China so far, but it is speeding up the local production of the model. In a bid to secure the position in the Chinese green car market, Hyundai Motor has to compete with local automaker BYD, the U.S.’ Tesla and Toyota.
Hyundai Motor is expected to mass produce HEVs first and PHEVs later in the Beijing plant. Since the Chinese government is currently providing subsidies only to people who purchase PHEVs, it is relatively easy to boost the sales of the models. Hyundai Motor has launched the LF Sonata PHEV in July this year, for the first time in the domestic industry.