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        home > news > Automakers > Hyundai’s U.S. CEO Says “Worst Has Passed” In Semiconductor Shortage — But Maker Plans to Produce its Own Chips

        Hyundai’s U.S. CEO Says “Worst Has Passed” In Semiconductor Shortage — But Maker Plans to Produce its Own Chips

        South Korean carmaker sees big growth ahead for EVs, but government incentives will set the pace.

        Paul A. Eisenstein
        Paul A. Eisenstein , Publisher & Editor-in-Chief
        Oct. 14, 2021

        Hyundai expects to see its manufacturing operations get back to normal in the weeks ahead, though it won’t be able to fully catch up on production losses caused by the semiconductor shortage until 2022, José Muñoz, the South Korean carmaker’s global chief operating officer, said during a media webinar.

        Hyundai COO Jose Munoz
        José Muñoz, Hyundai’s global COO and president and CEO of its North American operations, believes the worst has passed regarding chips.

        To help avoid problems with critical chip supplies going forward, Hyundai also plans to start producing its own semiconductors, said Muñoz, who serves in the additional roles of president and CEO of Hyundai Motor North America.

        “I think the worst has passed,” said Muñoz, noting the carmaker’s latest production schedule for October “is very, very close to our original plan.”

        But, like most manufacturers, Hyundai dealers’ inventories are extremely low due to production cuts made earlier in the year. As chip supplies rebound, the carmaker intends to boost production. Even so, it will take until “next year to offset some of the losses,” and build showroom stocks back to normal, the executive said.

        Building chips, not batteries

        Looking further into the future, Muñoz said, “We want to develop our own chips so we are less vulnerable to a situation like this.” But he didn’t explain how broad a catalogue of semiconductors Hyundai hopes to produce in-house. Today’s cars have become computers on wheels, some using more than 100 microprocessors, not all of which are the same.

        While Hyundai plans to produce chips, Muñoz said it will not follow the lead of rivals like General Motors, Ford and Volkswagen, which also are moving to produce their own batteries. Just last month, Ford announced plans to set up three battery plants in Tennessee and Kentucky, with enough capacity to power about 1 million vehicles, as part of a joint venture with SK Innovation.

        Hyundai assembly line
        Hyundai’s production levels are almost back to normal, according to Muñoz.

        Hyundai currently has ties to SK, as well as LG Chem and CATL. But Muñoz said it will continue to a purchaser of their batteries, rather than form any manufacturing joint ventures.

        EV plans

        The executive also said he expects to see its battery suppliers set up production in the U.S. as the Hyundai Motor Group begins manufacturing electric vehicles in the States. HMG will produce electric vehicles through all three of its brands, Hyundai setting up the Ioniq brand and launching its first long-range model, the Ioniq 5, in the coming months. Kia will add the new EV6, while Genesis is readying both the Electrified G80 sedan and GV60 SUV.

        The parent company laid out plans to invest $50 billion in products and technologies, noted Muñoz, a list that also includes the development of hydrogen vehicles and even flying taxis. About $7.4 billion of that will be invested in the U.S. by 2025.

        Muñoz cited comments recently made by global Group CEO Eui-sun Chung who said Hyundai can “no longer be a follower in the automotive industry. We need to be a game-changer and take risks.”

        Hyundai hydrogen trailer drone
        As part of its Hydrogen Wave program, Hyundai revealed it plans to introduce the next version of the fuel cell tech in 2023.

        Backing Biden

        The Korean carmaker is onboard with plans announced by President Joe Biden calling for 40% to 50% of U.S. new vehicle sales to be made up of plug-based vehicles by 2030. But, unlike some competitors, Hyundai believes that will require a mix of different technologies, including hybrid, plug-in hybrid, pure electric and hydrogen fuel-cell vehicles.

        After a slow start, U.S. sales of pure BEVs have begun to accelerate — doubling during just the first half of 2021. Muñoz expects that pace to continue gaining momentum. But it will require cooperation between industry and government, he stressed. That includes both the development of a nationwide charging infrastructure as well as sales incentives.

        While Hyundai supports efforts by Congress to extend and expand the current EV tax credits, it opposes a proposal that would offer additional benefits specifically for vehicles produced in plants with union labor. Neither the Hyundai nor Kia plants in the U.S. are unionized.

        “We don’t think a car produced in a union plant has any more green benefits than one produced in a non-union plant,” Munoz said.

        Big growth plans for the Hyundai and Genesis brands

        Even as it expands its line-up of green vehicles, HMG is looking for substantial growth in the U.S. market. The Hyundai brand and Genesis, its luxury spinoff, are targeting sales of 1 million vehicles “by 2025 or earlier,” the executive forecast.

        Hyundai sold 619,925 vehicles in the U.S. last year, a 10% decline largely blamed on the pandemic. The Genesis sales slipped nearly 23% in 2020, to 16,384. But both marques are regaining momentum. Through September, Genesis more than doubled last year’s total sales. Hyundai is positioned to top its 2020 sales by the end of this month.

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