Hyundai & BAIC want to establish a new EV brand for China

Hyundai continues to struggle with its China strategy: according to a media report, the Korean car manufacturer has reconsidered its electric car plans for the world's largest market. A new electric car brand planned in cooperation with BAIC is now apparently to be launched.

As the Korean publication Korea Economic Daily claims to have learned from insiders, Hyundai is now planning a new electric car brand exclusively for the Chinese market together with its Chinese partner BAIC. The brand with the internal code name OE RE is to be owned 50 per cent each by Hyundai and BAIC and will offer electric cars with cheaper LFP batteries specially tailored to the Chinese market.

The earlier plan for Hyundai to produce electric cars of the BAIC brand Arcfox in China at the joint venture plant in Beijing in the future failed for financial reasons, the article states, citing internal sources. Arcfox is a premium brand founded by the Chinese car manufacturer in 2017. It would have been the first time that Hyundai had built cars from a brand that was not part of its own group. The idea behind the apparently scrapped strategy was to increase the capacity utilization of Hyundai’s plants in China, which is currently below 50 per cent.

According to an earlier article in the Korea Economic Daily, Hyundai originally planned to simply launch electric models of its Ioniq brand in China. However, this plan was scrapped because it was considered “reckless” to compete with its own brand against dominant Chinese e-car manufacturers such as BYD, according to the newspaper’s internal sources.

Now it is to launch its own electric car brand tailored to China. It is part of Beijing Hyundai Motor’s initiative, launched in June 2023, to bring up to five electric models onto the Chinese market within three years.

China is a difficult market for Hyundai. There are political reasons for this. As the Korea Economic Daily reports, Hyundai’s annual car production (across all drive types) in China has fallen from 1.6 million units in 2017 to around 250,000. This is due to government restrictions imposed on Korean brands in response to the deployment of a US missile defense system called THAAD (Terminal High Altitude Area Defense) in Seoul in 2017. “During that time, Hyundai Motor missed the chance to ride the EV boom in China, trailing new EV Chinese brands in overall car sales,” the newspaper wrote. Hyundai had once considered withdrawing completely from the neighboring country, but then decided to revive its business with clean vehicles.

kedglobal.com