Focusing on Green Cars
Hyundai Mobis plans to invest approximately 9 trillion won (about US$7.8 billion) in electrification facilities, technology for future growth engines and startups over the next three years, a company executive said at CES 2020 in Las Vegas, the United States on Jan. 7 (local time).
The investment plan is geared toward attaining the company’s goals disclosed in 2018. At the time, Hyundai Mobis put out a blueprint that it would increase sales by 8 percent every year to attain 36 trillion won (about US$31 billion) in 2022 and 44 trillion won (about US$38 billion) in 2025.
"These goals were based on our plans to become an aggressive first mover in the field of electric vehicles and electrification," said Koh Young-seok, director of Hyundai Mobis's strategy and investment. “In fact, Hyundai Mobis has greater growth potential.” Koh is known to be a close aide to Chung Eui-sun, senior vice chairman of Hyundai Motor Group.
Koh picked green cars as the growth driver of Hyundai Mobis.
In 2018, Hyundai Motor Co. and Kia Motor Corp. accounted for 93 percent of Hyundai Mobis's supply of modules and core components. "We should lower the proportion of our supply to Hyundai and Kia to 40 percent in the long term," Koh said.
Hyundai Mobis will invest 3 trillion won (about US$2.6 billion) to 5 trillion won (about US$4.3 billion) in expanding its parts production capacity in the electrification field, 4 trillion won (about US$3.4 billion) to 5 trillion won (about US$4.3 billion) in developing technology and products for corporate growth and more than 150 billion won (about US$129 million) in fostering startups, Koh added.
He also disclosed a financing plan. He said the company held 7.4 trillion won (about US$6.4 billion) in cash as of early 2019. On top of it, the company earns 1.4 trillion won (about US$1.2 billion) to 2 trillion won (about US$1.7 billion) in cash every year. Therefore, the company will be able to secure 12 trillion won (about US$10. 3 billion) in total in three years. Hyundai Mobis plans to invest about 1 trillion won (about US$862 billion) in shareholder return including treasury share purchases.
The company is planning to increase the proportion of R&D investment from the current 7 percent of sales (about 10 trillion won or US$8.6 billion) to 10 percent, Koh added.