Hyundai doubles down on hybrids as EV demand cools

Hyundai is shifting gears, doubling the number of hybrid models in its lineup as demand for all-electric vehicles slows. The South Korean automaker announced the new plan, dubbed “Hyundai Way,” during its annual Investor Day.

The plan reflects broader industry trends as major brands reevaluate their electric vehicle strategies. The decision signals a significant pivot back in response to changing market dynamics.

Following a recent decline in EV demand, Hyundai plans to bolster its hybrid lineup to 14 models, up from seven, by introducing new gasoline-electric drivetrains. The company forecasts global hybrid sales to triple to 1.3 million units by 2028, positioning hybrids as a bridge technology as enthusiasm for fully electric vehicles deflates.

North America is set to see the most significant increase, with hybrid sales expected to surge from 170,000 this year to 690,000 by 2028. In Europe, hybrid sales are acclaimed to rise from 150,000 units this year to 220,000 by 2028.

All hybrids great and small

Hyundai will introduce a second generation of its existing hybrid system (TMED-II) at the beginning of next year, covering everything from small cars to luxury Genesis models. This update aims to enhance performance and fuel efficiency, although specific targets were not disclosed.

The company is also developing a range-extender hybrid system (EREV) that uses an electric motor to power the wheels and an internal combustion engine to recharge the battery. This system would offer the driving feel of an EV with the range of a traditional car.

This confirms how the EREV format is growing from a marginal role into a promising new technology emerging from BEVs’ unmet expectations. It’s also a preferred solution for bigger vehicles, as traction battery technology needs to develop further.

The EREV system, which Hyundai says could achieve driving ranges of over 950 kilometers, will use a smaller, less costly battery than those found in BEVs, making the vehicles more affordable. The driveline will be developed for the Chinese and North American markets.

A measured approach

Hyundai’s pivot isn’t precisely a loud thunder in clear skies, as other automakers like Volkswagen, Ford, Nissan, and Mercedes-Benz are scaling back their EV ambitions due to affordability and widespread adoption challenges.

Car companies prioritizing hybrid technology, like Honda and Toyota, reap solid financial results while battery-power advocates see their profits dwindle. A recent study by consultancy firm EY revealed that the German car giants’ operating profit plummeted by almost 20% this year.

Hyundai CEO Jaehoon Chang noted that initial optimism about the rapid shift to EVs has given way to a more measured approach, with hybrids gaining traction as a practical alternative. “The shift to EVs is slowing down,” Chang said during the presentation. “And with the recent slowdown in the EV transition, the demand for hybrids has been picking up.”

Hyundai’s new strategy also involves significant investment in research and development. It plans to spend €36.1 billion over the next decade on innovations, including battery technologies and hydrogen energy. Accelerating solid-state batteries and cell-to-vehicle technology are among the priorities.

This can further reduce the car’s weight by 10% compared to cell-to-pack. Interestingly, the company wants to develop a cheaper NMC pack as a twin to the rising LFP chemistry, which is currently considered the booster for affordable EVs.

Fuel cell technology’s envisioned expansion reaches beyond automotive as the company seeks to capture new aviation, trains, and maritime markets. Heavy transport seems to be the road forward for hydrogen technology.

Reaffirming EV target

Despite the renewed focus, Hyundai remains committed to a long-term electric future. The company reaffirmed its target of selling 2 million EVs annually by 2030, which must be reached by launching 21 electric cars by then—even as this entails delaying some new EVs to refine their market value and competitiveness. Chang emphasized that leaning on hybrids gives Hyundai the “time to be better prepared for EVs” as the market evolves.