In May 2023, Hyundai announced a local investment of KRW 2 trillion (approximately USD 1.52 billion) to establish an EV factory in South Korea, with a groundbreaking ceremony held on November 13. The factory is expected to be completed in 2025, with electric vehicle production set to commence in the first quarter of 2026.

The initial production capacity is planned at 200,000 vehicles per year, focusing on electric SUVs under Hyundai’s premium brand, Genesis.

TrendForce’s Insights:

1. IONIQ 5’s High Cost-Performance Welcomed in the North American Market, Serving as a Pillar for Hyundai’s Electric Vehicle Endeavors

The IONIQ 5, built on Hyundai’s E-GMP platform, boasts an 800V charging infrastructure and a 3.5-second acceleration from 0 to 100 km/h, all priced around USD 40,000. In comparison to other 800V competitors in the North American market, such as the Audi e-tron GT, Lucid Air, and Taycan, which are priced at approximately USD 80,000 to 100,000, the IONIQ 5 stands out with competitive features.

South Korea demonstrates a significant level of self-sufficiency in the strategic components of electric vehicles. Battery suppliers Samsung SDI and LG Energy Solution (LGES) rank among the world’s top ten battery suppliers.

Additionally, Hyundai Mobis stands as South Korea’s largest automotive parts supplier, offering a comprehensive product line that includes various components in electric motors and controls. With robust support from a powerful supply chain, this enhances Hyundai’s market competitiveness.

According to Hyundai North America’s reported sales figures for August 2023, the IONIQ 5 and IONIQ 6, both built on the E-GMP platform, collectively sold 5,235 units in the North American market. This reflects a remarkable 245% growth compared to the same period in 2022.

The year-to-date total sales of the IONIQ 5 and 6 reached 28,000 units by August, showing a notable 63% growth compared to the same period last year. It’s noteworthy that these achievements were made without the benefit of the USD 7,500 subsidy under the “Inflation Reduction Act.”

The success of the IONIQ series has bolstered Hyundai’s confidence in making this platform a core element, facilitating the development of related models and further investments in the electric vehicle business.

2. IONIQ Temporarily Pauses Entry into Chinese Market Amidst Intense Homogeneous Product Competition

With the rise of local Chinese automotive brands and the trend toward electrification, Hyundai’s sales in the Chinese market have plummeted from 1.14 million vehicles in 2016 to 250,000 vehicles in 2022, as per data released by the China Association of Automobile Manufacturers.

In 2021, Hyundai sold its first factory in Shunyi to Li Auto, and in June 2023, Hyundai announced plans to sell two more of its remaining four plants.

In the electric vehicle sector, the IONIQ 5 is built on an all-new electric vehicle platform, outperforming earlier models based on oil-to-electric conversion platforms in both overall efficiency and performance. With its affordable price, it presents a formidable challenge to equivalent models in Europe and the United States.

However, given China’s early development of new energy vehicle platforms and the completion of pure electric vehicle platforms by many domestic manufacturers, coupled with highly autonomous supply chains, IONIQ does not enjoy overwhelming advantages in China. Therefore, the initial focus on the European and American markets is a strategically sound decision.

As European and American automakers continue to establish pure electric vehicle platforms and competitors like Audi and Stellantis strengthen their technological exchanges with Chinese manufacturers, the advantages of the E-GMP platform will face challenges. To further enhance the economic scale of their products, the Chinese market remains a crucial challenge that Hyundai cannot ignore.

Owing to the EV market’s substantial demand for longer driving ranges and shorter charging times, automakers’ race towards high-voltage EV platforms has noticeably intensified, with various major automakers gradually releasing models featuring 800V charging architectures, such as the Porsche Taycan, Audi Q6 e-tron, and Hyundai Ioniq 5. According to TrendForce’s latest investigations, demand from the global automotive market for 6-inch SiC wafers is expected to reach 1.69 million units in 2025 thanks to the rising penetration rate of EVs and the trend towards high-voltage 800V EV architecture.

The revolutionary arrival of the 800V EV charging architecture will bring about a total replacement of Si IGBT modules with SiC power devices, which will become a standard component in mainstream EV VFDs (variable frequency drives). As such, major automotive component suppliers generally favor SiC components. In particular, Tier 1 supplier Delphi has already begun mass producing 800V SiC inverters, while others such as BorgWarner, ZF, and Vitesco are also making rapid progress with their respective solutions.

At the moment, EVs have become a core application of SiC power devices. For instance, SiC usage in OBC (on board chargers) and DC-to-DC converters has been relatively mature, whereas the mass production of SiC-based VFDs has yet to reach a large scale. Power semiconductor suppliers including STM, Infineon, Wolfspeed, and Rohm have started collaborating with Tier 1 suppliers and automakers in order to accelerate SiC deployment in automotive applications.

It should be pointed out that the upstream supply of SiC substrate materials will become the primary bottleneck of SiC power device production, since SiC substrates involve complex manufacturing processes, high technical barriers to entry, and slow epitaxial growth. The vast majority of n-Type SiC substrates used for power semiconductor devices are 6 inches in diameter. Although major IDMs such as Wolfspeed have been making good progress in 8-inch SiC wafer development, more time is required for not only raising yield rate, but also transitioning power semiconductor fabs from 6-inch production lines to 8-inch production lines. Hence, 6-inch SiC substrates will likely remain the mainstream for at least five more years. On the other hand, with the EV market undergoing an explosive growth and SiC power devices seeing increased adoption in automotive applications, SiC costs will in turn directly determine the pace of 800V charging architecture deployment in EVs.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com