Hyundai February sales dip 10% to 48,910 units; exports down 22%

Hyundai Motor India Ltd (HMIL) on Sunday reported a 10.3 per cent decline in total sales at 48,910 units in February.

The company had sold 54,518 units in the same month last year, HMIL said in a statement.

Domestic sales were down 7.2 per cent to 40,010 units as against 43,110 units in February 2019, it added.

The company's exports declined 22 per cent to 8,900 units as compared with 11,408 units a year ago.

Powered by hydrogen, Hyundai's trucks aim to conquer the Swiss Alps

Hyundai's hydrogen-powered 18-tonne trucks are set to hit the roads in Switzerland next month as the South Korean automaker looks to establish a case for its zero-emissions technology in a low carbon world.

Invented nearly two centuries ago, hydrogen fuel cells first lost out to combustion engines and now trail electric batteries in the push for greener transport because they are expensive, hydrogen is hard to store, and most of it is extracted from natural gas in a process that produces carbon emissions.

But when it comes to trucks, Hyundai and its partners argue that electric batteries won't always do the job because the bigger the payload, the bigger - and heavier - the battery, and that's a problem for crawling up Swiss mountains.

And with more than half of Switzerland's energy coming from hydropower, the country has the potential to extract "green" hydrogen from water with electrolysis, an energy-intensive but carbon-free process if powered by renewable electricity.

"It is not enough to produce a truck. You have to take care of the entire ecosystem, find like-minded partners and show this all makes sense for the customer," said Mark Freymueller, chief executive of Hyundai Hydrogen Mobility (HHM).

"It is possible to do this with a holistic approach and the right mindset," he told Reuters.

To be sure, Switzerland's green hydrogen is far more expensive than diesel now but Hyundai hopes that as governments clamp down on carbon emissions and the cost of producing the clean fuel drops, the numbers could start to add up.

McKinsey & Co said in study in January that the cost of hydrogen made with renewable energy could drop to 2 euros/kg by 2030 from 3-4.5 euros now - achieving cost parity with diesel for heavy vehicles, once the relative efficiency of the power sources and the lifetime costs of a truck are factored in.

While hydrogen has long been vaunted as a potential alternative to fossil fuels, expectations that fuel cells will have a role to play as the world decarbonises has helped push hydrogen-linked stocks to their highest in over a decade.

NORWAY NEXT?

For now, Hyundai is relying on government tax breaks for fuel cell trucks and its own subsidises to help make them economically viable for its partners: the end users, filling stations and green hydrogen suppliers.

Hyundai's H2 Xcient trucks have a 190 kilowatt fuel cell and seven high-pressure tanks holding nearly 35 kg of hydrogen, giving them a range of more than 400 km - far further than heavy goods vehicles powered by electric batteries on the market now.

Hyundai declined to say how much its subsidies will amount to. Globally, the company is betting heavily on hydrogen with plans to spend $6.7 billion on hydrogen technology by 2030 and to increase its annual capacity for fuel cells to 700,000.

It is starting out with 50 H2 Xcient trucks but plans to put 1,600 on Swiss roads by 2025 and is looking to launch similar projects in at least two more European countries this year, out of Austria, Germany, the Netherlands or Norway.

In Switzerland, HHM, the leasing unit set up by Hyundai and Swiss startup H2 energy, has partnered with Hydrospider, a joint venture of H2 Energy with industrial gas maker Linde and Swiss power utility Alpiq.

Hydrospider is about to start producing hydrogen for 40-50 Hyundai trucks at a 2 megawatt (MW) electrolysis plant at Goesgen. Stefan Linder, a member of Hydrospider's board of directors, said as more H2 trucks go into service it would have to boost capacity to 70 MW to 100 MW by 2023-2025.

In preparation for launching hydrogen trucks in Norway this year, H2 Energy has formed a partnership with Nel ASA, Greenstat and Akershus Energi to supply green hydrogen. Hydropower provides Norway with nearly all its electricity.

SUBSIDISED MODEL

The Swiss H2 Mobility Association - a group of nearly 20 firms - will be the first users, including the country's biggest retailer Migros, dairy producer Emmi, grocery chain Coop and filling station operators SOCAR and Tamoil.

End users such as Migros have committed to leasing Hyundai's trucks on pay-per-use contracts which give them mileage, warranty, services, insurance and access to sufficient hydrogen. HHM says its contracts will ensure Hydrospider and filling stations get sensible margins from the start.

"We are not fooling ourselves, it is initially a subsidised business model," said HHM's Freymueller, adding that this would be the case for the introduction of any new technology.

Over 10 years, an assumed investment of 1.3 million Swiss francs ($1.3 million) in a pump could be recovered if 15 trucks visited it exclusively for their annual fuelling needs, HHM estimates. Supermarket chain Migros is taking three Xcients and plans to measure their performance against a Mercedes-Benz truck powered by an electric battery, three biogas-fuelled trucks from Italy's Iveco - and diesel.

At the moment, Migros says it pays 50 million Swiss francs a year in heavy vehicle environmental duties (LSVA) levied on all vehicles over 3.5 tonnes using any roads in Switzerland. The Hyundai trucks will initially be exempt from LSVA.

Rainer Deutschmann, director of corporate transportation logistics at Migros, which operates 900 trucks shuttling between 22 production sites and nearly 900 shops, told Reuters he expected several technologies to play a role in decarbonisation.

"We will see on each journey what the energy consumption will be depending on the geography and topology," he said.

"With an electric battery, instead of carrying merchandise around you are carrying around the battery. You have a 200 km range, which you can use for a city, but you cannot use it for the Alps," he said. "H2 you can use for everything."

India has 150 million drivers and only 8,000 want electric cars: Report

Hyundai Motor Co. launched India’s first electric SUV this summer with a quirky TV commercial urging millennials to “Drive Into the Future.” A few months later, the automaker finds itself on a lonesome road.

In a nation of about 150 million drivers, only 130 Kona SUVs were sold to dealers through August. That slow pace is emblematic of the difficulties carmakers face in establishing an electric foothold in the fourth-biggest auto market, even with committed government support.

The Kona sells for about $35,000 while the average Indian earns about $2,000 a year -- and the best-selling gas guzzler costs $4,000. Yet Kona’s sticker price only kicks off the conversation about why EVs aren’t gaining traction in India -- there’s also a lack of charging infrastructure, a reluctance by banks to finance purchases and an unwillingness among government departments to use EVs as directed.

Barely more than 8,000 EVs were sold locally during the past six years, according to data compiled by Bloomberg. China sells more than that in two days, according to BloombergNEF projections.

“The affordability of electric cars in India is just not there,” said R.C. Bhargava, chairman of Maruti Suzuki India Ltd., maker of the sales leader Alto. “I don’t think the government or the car companies expect that in the next two to three years there will be any real buying of electric vehicles.”

The segment still isn’t making meaningful strides more than four years after the government started promoting cleaner vehicles for one of the world’s most-polluted countries. In February, Prime Minister Narendra Modi’s administration committed to spending $1.4 billion on subsidies, infrastructure and publicity.

The potential of India’s EV market can’t be ignored. There are only 27 cars for every 1,000 Indians, compared with 570 for the same number of Germans, giving global automakers an opportunity to challenge the dominance of Maruti –- the unit of Japan’s Suzuki Motor Corp. that sells every other car on local roads.

Maruti’s not introducing its first EV until next year. Tata Motors Ltd. and Mahindra & Mahindra Ltd. build some base-level electric cars, yet they have a limited range or are exclusively for government use. The Kona gives Hyundai a first-mover advantage in a market where EVs may comprise 28% of new vehicle sales by 2040, according to BNEF.

Not only Hyundai sees opportunity in Asia’s third-largest economy. MG Motor, the iconic British carmaker owned by China’s SAIC Motor Corp., and Japan’s Nissan Motor Co. see EVs as a way to expand in the country.

“Somebody has to take the leadership, and it will trickle down,” said Rajeev Chaba, managing director of MG Motor India, which plans to launch an electric SUV by December.

The process of scaling up will be slow, and MG Motors would be satisfied selling 100 cars a month initially.

“We have to start somewhere,” Chaba said.

Right now, though, consumers pass over electric cars for bigger, longer-range and cheaper gas guzzlers, said Vinkesh Gulati, vice president of the Federation of Automobile Dealers Associations, which represents more than 80% of automobile dealers in India.

More than half of the passenger vehicles sold in India last year cost $8,000 or less, according to BNEF. Electric cars won’t achieve price parity with gasoline-powered cars until the early 2030s, BNEF said.

“Consumers care about EVs, the excitement is there,” Gulati said. “But that stops the moment we tell them the price.”

Yet even for those who can afford the Kona, plugging in is problematic. Nidhi Maheshwary, a 40-year-old finance professional working near New Delhi, wanted to buy an EV to show her children an example of environmental responsibility.

So when Hyundai launched the Kona, Maheshwary ordered one. Sounds easy, but it didn’t turn out that way.

Almost immediately, she got into a spat with neighbors about charging the SUV in her apartment building’s basement lot. The residents’ society said it posed a fire risk -– even though Hyundai engineers and the fire department said it was safe.

So Maheshwary charges the car at her office while weighing potential recourse against those neighbors. Hyundai offers two small chargers with the Kona, although it can take as many as 19 hours to fill up the vehicle.

India had an estimated 650 charging stations for cars and SUVs in 2018, according to BNEF. China, the largest market for EVs, has about 456,000 charging points, official data shows.

India’s sparse charging infrastructure stems from locals’ chicken-and-egg approach to the issue.

At a conference in New Delhi last month, government officials and EV-component makers debated whether to create adequate charging infrastructure to promote sales or whether to wait until there are enough EVs on the roads before building it out.

“We are pretty sure that people are going to like our EV, but we would have our challenges like infrastructure,” Chaba said. “But we have our plans to handle that.”

Those include first requiring that the buyer can install a charger at home, he said.

But there’s another factor besides income that makes it difficult to pay for one of these cars. The unaffordability of EVs also stems from the unavailability of financing, said Pranavant P., a partner at Deloitte India focusing on the future of mobility.

Until there’s an established secondary market for EVs, banks and other institutions are hesitant to extend purchasing loans, he said. A majority of Indian vehicle sales are financed by lenders.

The government, both federal and local, will have to offer help for EVs to be adopted in the mass market, said Puneet Anand, group head of marketing at Hyundai Motor India. Modi’s budget in July included incentives such as reduced taxes, income tax benefits and import duty exemptions for certain EV parts.

The first beneficiaries will be the ubiquitous scooters and motorcycles -- with subsidies meaning to support sales of 1 million two-wheelers, compared with 55,000 electric cars.

Yet the government still needs to practice what it’s preaching. Energy Efficiency Services Ltd., a joint venture of state-run companies responsible for replacing state vehicles with EVs, awarded its first tender in September 2017 for 10,000 cars.

But as of July, agencies had accepted only 1,000 of them. Now EESL is offering the vehicles to taxi companies.

None of that helps Devdas Nair, a 34-year-old advertising professional in New Delhi looking for new wheels. He wants to try an EV and says he’d pay somewhat more to help the environment and for future savings. Yet for him right now, it’s too much of a gamble.

“I was excited about the Kona, but the price tag is just too much,” he said. “We don’t even know how the charging infrastructure is going to be in India. That makes me rethink -- actually not think about it at all.

Hyundai India net profit grows 21.5% in 2018-19 despite slow down

Hyundai Motor India Ltd (HMIL) on Tuesday reported a 21.5 per cent growth in net profit in 2018-19, bucking a slowdown hurting the domestic passenger car sales across the industry.

The company reported Rs 2,581.7 crore as net profit in 2018-19, compared to Rs 2,124.2 crore a year ago. Overall sales rose by around 3 per cent to 7.1 lakh units from 6.9 lakh last year. HMIL sales in the domestic market increased to 5.45 lakh units during 2018-19, from 5.36 lakh units. It was a 2 per cent growth, said the company in its annual return filed with the Ministry of Corporate Affairs.

Exports grew by 5.2 per cent to 1.62 lakh units during the year, compared to 1.54 lakh units in the previous year. West Asian and African countries contributed 53 per cent and 14 per cent to the company's exports, forming the largest chunk. Exports to Latin America and Asian regions decreased by 13 per cent and 24 per cent.

The company achieved its highest ever wholesale sales volume--of 52,001 units--in October 2018 since inception. It has achieved a milestone of 8.5 million cars production in January 2019. The total production was 7.1 lakh units as against 6.9 lakh units previous year with an increase of 2.6 per cent. Parallel production in the manufacturing line and an increase in unit per hour contributed to the production growth, said the company.

"Liquidity crunch followed by NBFC crisis led to moderation in credit availability thereby negatively impacting domestic demand and growth in H2 financial year 2018-19. Hence overall FY 2018-19 growth came at 5 year low of 6.85 per cent compared to 7.2 per cent in FY 2017-18. Stable Government ensuring policy continuity, fiscal stimulus , liquidity easing measures from RBI and improvement in India's rank in Ease of doing business index should facilitate economic recovery in coming years," said the company about the industry trends this year.

Retail credit squeeze due to NBFC liquidity crisis, uncertainty in taxi policy regarding diesel ban and safety norms regulation, election uncertainty, increase in insurance and fuel cost were the main factors that contributed the above fall in growth rate. However new launches through Auto Expo 2018 and reduction of interest rate at the end of the Financial Year contributed to a marginal growth in the industry.

The company is in the process of increasing the capacity to 7.5 lakh units per annum to meet the market demand by way of automating certain processes, removing the bottlenecks in the production process and introduction of new models, it said.

An email sent to the company asking for comments was not responded till Tuesday evening.

Hyundai weighs options for sourcing electric vehicle components in India

South Korean auto major Hyundai is looking at various options for sourcing electric vehicle (EV) components in India, including local manufacturing of battery parts, a top company official said.

The automaker, which is present in India through its wholly-owned subsidiary Hyundai Motor India Ltd (HMIL), said it is also looking for further clarity in government policy to drive in hybrid models in the country.

"We are studying various options, not only us (HMIL) in India, but even Hyundai Motor Company (HMC) procurement division is looking at it," HMIL MD and CEO S S Kim told PTI when asked if the company plans to locally manufacture batteries for EVs.

The company's parent HMC is even contacting suppliers in India for battery components, he added.

Hyundai plans to drive in its first EV in a complete knock-down (CKD) form in the country this year. The vehicle would be assembled at Hyundai's Chennai-based manufacturing plant.

With the government pushing for local sourcing of EV components, Suzuki Motor Corp along with its partners is already in the process of constructing an automotive lithium-ion battery manufacturing plant at Hansalpur in Gujarat.

Tata Motors and Mahindra are also actively pursuing EV segment in the country.

Kim said government support is critical to support growth of EVs in the personal mobility space.

"In many countries where the EVs are sold to private customers, they are supported by the government in terms of subsidies ... if OEMs need to push EV mobility, government push is critical, so we are expecting some more support," he added.

Under the FAME-II scheme with an outlay of Rs 10,000 crore, the government is primarily focusing on electrification of public transport.

When asked about launching hybrid vehicles in the country, Kim said the company will take a decision after further policy clarity on the segment from the government.

"Once the hybrid policy and its framework is readied by the government we will also plan our activity accordingly," he said.

On establishing a new factory, Kim said the installed capacity at the company's Chennai plant is currently enough to take care of the demand.

The company has added an additional capacity of 50,000 units, taking the total installed capacity at the plant to 7.5 lakh units per annum, he added.