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.

Xiaomi’s venture into automotive industry takes a significant stride as the company’s latest models, SU7 and SU7 Max, makes its debut in the latest catalog from China’s Ministry of Industry and Information Technology. The listed entity is Beijing Automotive Group Co., Ltd. (BAIC), marked by the distinctive “Beijing Xiaomi” emblem on the rear.

Sources from Xiaomi’s car supply chain suggest an imminent small-scale trial production phase, hinting at the first model’s market introduction in February 2024, reported by UDN News.

As per the disclosure, the cars boast a 3,000mm wheelbase. SU7 will feature Fdbatt’s lithium iron phosphate batteries, and SU7 Max is complemented by CATL’s ternary lithium batteries. Interestingly, the smart driving features will not include an optional optical radar package.

The catalog showed Xiaomi’s car brand as Xiaomi, while the declared corporate entity is Beijing Automotive Group Off-Road Vehicle Co., Ltd. (BAIC ORV). The product’s rear proudly displays “Beijing Xiaomi.”

Despite leveraging BAIC’s production qualifications, Xiaomi’s car has its declared production address at the site of its self-established factory.

The car factory’s construction unfolds in two phases, with the first, covering approximately 720,000 square meters, achieving an annual capacity of 150,000 vehicles by June 2023. The second phase is slated to commence in 2024, concluding in 2025. Public records confirm the successful acceptance inspection of Xiaomi’s car first phase factory workshops on June 12.

Xiaomi Group Chairman Jun Lei’s October announcement highlighted smooth progress, anticipating an official launch in the first half of 2024.

Since Lei’s announcement of Xiaomi’s foray into smart cars, industry observers have closely monitored Xiaomi’s car dynamics. Internal sources reveal that Xiaomi’s car will leverage ICT industry experience to enhance operational efficiency across research, production, supply, and sales.

Xiaomi plans a US$10 billion investment in the automotive sector over the next decade. Operating in a wholly-owned model, Xiaomi aims to provide users with a comprehensive smart ecosystem and enrich their smart living experiences.

At the October Xiaomi product launch, the introduction of the HyperOS was a highlight, applicable not only to mobile devices but also set to feature in Xiaomi’s cars.

A notable addition revealed by National Business Daily, citing a supplier who visited Xiaomi’s car factory, is that the four major manufacturing process production lines (stamping, welding, painting, and final assembly) in Xiaomi’s car first phase factory are operational, engaging in small-scale trial production. With mass production scheduled to commence in December, Xiaomi’s car is poised for market launch in February next year.

(Image: China’s Ministry of Industry and Information Technology)

Fisker, a prominent partner of Foxconn in the EV sector, is taking steps to expedite production and deliveries of its first all-electric SUV, the “Fisker Ocean.” However, faced with slowing EV demand and the market leader Tesla initiating a price war, Fisker has joined the price reduction battle, announcing a cut in the price of their flagship model, the Ocean Extreme.

As reported by media outlets including Reuters, Fisker revealed price reductions in the U.S. market on October 23rd. The Ocean Extreme, previously priced at $68,999, has been lowered to $61,499, marking a $7,500 reduction. Customers who have already placed orders and existing owners are eligible for these reduced prices. In the Canadian market, the price has been lowered from $89,999 CAD to $79,799 CAD (approximately $58,169 USD), a reduction of $10,200 CAD.

In comparison, the Ocean Extreme competes with Tesla’s Model Y Performance, which is currently priced at $41,390 in the U.S.

Fisker’s CEO, Henrik Fisker, acknowledged the competitive nature of the rapidly growing EV market, stating, “Fisker must adapt to the realities of intensified competition in the rapidly growing EV market.”

As interest rates and inflation have both risen, impacting consumer willingness to make vehicle purchases, Tesla initiated a price reduction strategy to solidify its position as a leader in the EV industry. For EV startups that are relatively new to the market and smaller in scale, this competitive landscape can be particularly challenging.

Currently, the Fisker Ocean is available in three versions, including the base single-motor Sport, the mid-range dual-motor Ultra, and the top-tier Extreme, all featuring dual-motor all-wheel drive, with the Extreme version boasting an impressive 564 horsepower.

While Fisker has reduced the price of the Ocean Extreme, the company has simultaneously increased the prices of the lower-tier Sport and Ultra models in the U.S. market by 4% and 6%, respectively. The new prices for these models are $38,999 and $52,999, and similar price adjustments have been implemented in the Canadian market.

The world’s largest automaker, Toyota (TM-US), announced on Thursday, the 19th, that its North American division has reached an agreement with Tesla (TSLA-US). Starting in 2025, Toyota’s electric vehicles will adopt Tesla’s North American Charging Standard (NACS).

Prior to Toyota’s announcement, companies like Ford, General Motors, and BMW had already joined the Tesla NACS alliance, providing customers with access to Tesla’s extensive Supercharger network.

In 2025, Toyota will integrate the NACS interface into specific Toyota and Lexus BEVs, including a new three-row electric SUV produced at Toyota’s Kentucky plant.

Vehicle owners can connect to Tesla’s widespread North American charging infrastructure, comprising over 84,000 charging stations, including Level 2 and DC fast chargers, using Toyota and Lexus apps.

Owners or lessees of Toyota and Lexus vehicles using the Combined Charging System (CCS) specification will have the option to purchase NACS charging connectors starting in 2025.

Notably, we have anticipated that by 2026, the global tally of public charging stations will soar to 16 million, marking an impressive threefold increase from 2023 figures. As this unfolds, the global ownership of NEVs—which includes both PHEVs and BEVs—will surge to 96 million.

In March 2023, Xiaomi Chairman Lei Jun reiterated that Xiaomi’s new energy vehicles (NEVs) would enter mass production in the first half of 2024. Fast forward to October 4, 2023, and reports indicate that Xiaomi’s EV, codenamed MS11, has received certification from the Bluetooth Special Interest Group (SIG). Furthermore, with ongoing news about hiring, site selection, and trial production, though the exact mass production date is yet to be confirmed, it is likely not far from Chairman Lei Jun’s commitment, potentially positioning Xiaomi ahead of Apple and Sony in launching new energy vehicles.

TrendForce’s Insights:

1. Extensive Preparation: Xiaomi’s Years of Investment in Automotive Components

With the transition to the era of new energy vehicles, there is a shift from traditional gasoline to electric power as the primary energy source. Additionally, the increasing demand for advanced driver-assistance systems has attracted numerous electronics and technology companies to enter the new energy vehicle industry. For instance, smartphone brands such as Xiaomi, Apple, and Sony have all announced plans to manufacture EV. Based on the progress reported by the media, Xiaomi may take the lead in commencing mass production of new energy vehicles in 2024, while Apple and Sony, the latter in collaboration with Honda, are likely to introduce their new energy vehicles after 2025.

To ensure adequate self-sufficiency and competitiveness, Xiaomi began laying the foundation early. Starting as far back as 2016, the company ventured into the field of LiDAR. Over the years, Xiaomi, along with its affiliated funds and investment entities, has made extensive investments in crucial components such as power batteries, electric propulsion systems, and electronic controls. These investments have covered more than 50 companies in the industry. Notably, in 2021, Xiaomi acquired DeepMotion, a startup specializing in autonomous driving solutions. Xiaomi’s investment strategy indicates it possesses the necessary tools to enter the new energy vehicle industry, including mastery of essential components and substantial capital resources.

2. New Energy Vehicles: High Costs, Low Profit Margins

The automotive industry is characterized by substantial capital investments, with a significant portion of revenue stemming from post-sale maintenance and services. Pioneering startups in the field of new energy vehicles, such as NIO and Li Auto, continue to grapple with financial losses. Although NIO’s President, Lihong Qin, expressed that “when a company does a series of things right, profitability will come naturally,” it remains to be seen whether Xiaomi, accustomed to the consumer electronics sector, shares the same level of patience.

Despite Xiaomi’s focus on profitability through smart driving software-related subscription services, the challenges are significant. Current limitations lie in the complexities associated with the responsibility for advanced autonomous driving systems beyond Level 3. The automotive industry currently prioritizes Level 2 automation, and according to data from the Chinese Ministry of Industry and Information Technology reveals that, by 2022, the penetration rate of Level 2 (L2) vehicles had already reached 34.5%. This high level of adoption indicates a highly competitive landscape, which may present challenges for Xiaomi’s business model. Xiaomi’s typical approach involves leveraging low-margin hardware to acquire users and generate traffic, with profits coming from its ecosystem of services, including advertising and internet-related offerings.

Moreover, new energy vehicles tend to have longer product lifecycles compared to smartphones. As a result, consumers with budget constraints tend to prioritize the tangible value of hardware. This implies that building acceptance for software subscription services may require a significant amount of time.

Xiaomi might have crossed the initial hurdles of entering the automotive industry. However, the challenges post-entry, as outlined above, will genuinely test whether the Xiaomi model can be as effective in the new energy vehicle sector as it has been in its traditional domains.

Explore more

• [News] Xiaomi’s EV Charging Patents Revealed, Unwavering Progress in Car Manufacturing
• [News] Xiaomi Begins Trial Production of 50 Prototype Cars per Week
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