Hyundai Motor Group has established a factory for transmissions for eco-friendly cars for the first time in China. The move is seen as a strategy to cope with the rapidly changing Chinese vehicle market. The Chinese government is weighing timing to discontinue sales of internal combustion engine-powered vehicles in order to expand the supply of eco-friendly cars.
The transmission plant marks the first time that Hyundai Motor, Kia Motors and even their subsidiaries establish a factory in China after the Beijing government's retaliation of South Korea for the deployment of the Terminal High Altitude Area Defense (THAAD) System.
According to the automobile industry on Jan. 21, Hyundai Transys established No. 3 Transmission Factory in Rizhao, Shandong of China. The factory will produce internal combustion engines and transmissions for environment-friendly cars. Hyundai Transys does not officially disclose the size of the factory but auto industry experts estimate the factory’s production capacity at 300,000 units a year.
The decision was made in line with China's move to toughen environmental regulations. Beginning this year, China ordered companies producing or selling more than 30,000 cars per year in China to fill at least 10 percent of their cars with green cars. In 2020, the proportion of environment-friendly vehicles will be raised to 12 percent. Since Hyundai is producing about 1.2 million units per year in China, the automaker needs to produce 120,000 units of environment-friendly cars starting this year.
Electric carmakers such as Tesla also announced plans to increase production in China in response to environmental regulations. Some auto industry experts say that Hyundai Motor will face a strong need to produce key parts such as transmissions for eco-friendly cars locally and use them or supply them to other companies.