Hyundai & Kia Create Great Electric Vehicles, But Where Are The Battery Contracts?
The Hyundai Kona EV and Kia Niro EV have won a lot of praise, as well as prestigious awards. The Kona EV even won the 2019 CleanTechnica Car of the Year award, and the Niro EV was runner-up. These vehicles, as well as some other EV offerings from the companies, are stylish, offer long range, and come with creature comforts you’d expect in their price range.
How many units a year could just these two models sell? I’d say 300,000, easy. The only problem is, we may never know, because Hyundai and Kia aren’t prepared to meet consumer demand — not even close — and we don’t have any clear signs that they’re building up production capacity to try to catch up to what consumers want.
Last month, I talked to a new owner of a Kona EV in Poland. He was happy with the car, loved it, and had already taken a trip to Spain and back in it. He was happy there were three places in Wroclaw, Poland, where he could have it serviced if need be. However, he was clearly disappointed with one thing: he found out from the company rep that only 15 Kona EVs had been allocated to Poland for 2019. He got the car in June right as deliveries started. Perhaps he was the first Kona EV owner in the country, but even if not, he was certainly one of the first and will seemingly remain one of the first for years, since Hyundai isn’t really selling the vehicle there.
Yesterday, a CleanTechnica commenter named Richard Cruise commented, “I spoke to a Kia salesman in Ireland yesterday. He said they had 5 (yes, only 5) e-Niros to sell for 2019 and sold them all within the first 3 hours. They’re now taking bookings for 2020 but have no idea of what supply they’ll get.”
Crazy? Indeed. Hyundai and Kia (which can together go by the name Hyundai Kia Automotive Group, which I’ll abbreviate as Hyundai-Kia here) are widely seen as decent competitors in the electric vehicle market. Some people consider them the most serious old-school automakers, since they have designed good EVs with good range and fairly competitive pricing. Actually, I would say many EV fans put them behind only Tesla and would happily buy an EV from them. However, the important point is that they aren’t actually competing. It seems that Hyundai and Kia are simply producing “compliance cars” that are aimed at helping the companies meet EU regulations, California regulations, and regulations elsewhere. Better that than having to pay expensive fines (or make emission credit deals with Tesla). As far as I can tell, though, beyond meeting regulatory requirements, Hyundai and Kia do not want to produce and sell large volumes of their electric vehicles.
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Consider for a moment: what if those first 20 owners in Poland and Ireland absolutely love their Kona EVs and Kia Niro EVs? What if they tell all their friends, family, and coworkers about how great the cars are? Who’s going to go ahead and buy one as well?
This is no great mystery. Very few of them would be fine waiting a year or more for a car. Very few of them will have the timing line up perfectly for that.
Even if these initial owners did somehow sell the Kona EV and Niro EV to dozens of people, it would take ages for them to get their cars and then sell the models to their own friends, family, and coworkers.
I think you see where I’m going here: there’s no opportunity for momentum. And it doesn’t matter anyway, since momentum will just hit a brick wall every time another quota is reached.
There are various potential explanations for the lack of supply, some more nefarious, some more idiotic.
It could be that Hyundai–Kia, despite knowing about the climate and pollution crises we face, doesn’t want to sell many electric vehicles because of the financial challenges of switching from gas cars to electric cars. It could be slow-walking the transition while trolling EV fans who want a good electric car from a conventional automaker. Or maybe it’s none of that.
It could be that Hyundai–Kia is honestly shocked by the amount of demand for its EVs, and just didn’t plan for enough production capacity because it didn’t judge the market right.
It could be that it’s really hard to secure enough batteries. Most automakers are getting batteries from just a handful of battery manufacturers. Maybe these battery producers need firm commitments for high numbers of sales in order to commit to production and Hyundai–Kia can’t provide that without more of a market track record. Maybe certain other companies are gobbling up the battery contracts, leaving Hyundai–Kia with limited options.
No matter the case, it seems that now is the time to jump into EVs a lot more seriously. Hyundai–Kia’s home country of South Korea is banning several diesel models in the face of continued diesel emissions cheating. EV fans are standing in long lines in the mall to see, touch, and order a Tesla Model 3. Furthermore, as I noted yesterday and Maarten re-emphasized in his own way, EV technology is hitting a critical crossover point. Battery prices have been coming down, and in certain cases and markets, electric cars are starting to outcompete their gasoline competitors without subsidies. Because it has taken years to get to this point (decades if you put it in enough context), many of us expect the next 5 years to be something like the past 5 years. No chance! The opportunity is there for the automakers willing and able to take it. The revolution is arriving, which means blood is coming. Automakers that are too slow and complacent will be destroyed. Automakers that pay attention to what is happening and are shrewd and focused can gobble up market share.
A few days ago, I wrote about Volkswagen Group’s opportunity in this regard. The large German automaker has committed to a broad lineup of fully electric cars built on a good electric platform. Volkswagen might be securing large supplies of batteries. It doesn’t seem to be holding back, even if it’s a bit late. Hyundai–Kia has its own opportunities. It has a good reputation in the EV world (better than any of the other conventional automakers from my observations). It has done a good job designing super aerodynamic, efficient, attractive electric vehicles. It must have decent proof of consumer demand for its vehicles, even despite all of the barriers that have been put in their place. What Hyundai–Kia needs to do, which it may be working on (or not), is: secure a huge amount of battery supplies; get existing factories converted or new ones up and running for electric motors and cars, or whatever is needed for electrification; go on an aggressive marketing campaign like Volkswagen is; and then start producing and selling those electric vehicles as quickly as possible.
Time is of the essence. Automakers that think they have another 3–5 years to test the waters and see how things shake out are going to sorely regret it, in my humble opinion. It is not a time to play defense or hold the ball in the corner of the field by the corner flag. It’s time to make cutting, slicing, sprinting moves to the goal — and then repeat, repeat, and repeat.
Hyundai sold 378,714 passenger vehicles in June 2019. It sold ~2,602 fully electric vehicles in the USA (178) and Europe (2,424). That’s less than 1% of sales. Throw in an estimate of maybe 100–200 elsewhere and you’re still well under 1%.
Kia sold 236,229 passenger vehicles in June 2019. It sold ~961 fully electric vehicles in the USA and Europe. That’s far less than 1% of sales. The brand’s EV sales were probably less than 0.5% of its total global sales. (One figure here has been updated thanks to data from EV Volumes.)
Hyundai and Kia together sold 130 fully electric vehicles in China in June, according to EV Volumes.
When do Hyundai and Kia plan to hit 1% EV sales? When do they plan to hit 2% and 5%? When 10%? (I’m afraid I don’t want to know the answer.)
What are your thoughts on Hyundai and Kia? Do they have the commitment and transition crew needed to grow in this industry transformation? Do they have more time to carefully and cautiously get their plans in order? Are they setting the groundwork quietly deep under the surface and these initial production constraints are more mirage than disaster? Do they have the winning formula at their fingerprints? Or are they on the verge of tasting victory while falling into a pit of complacent collapse?
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