Hyundai, in collaboration with its Chinese partner BAIC, is allegedly in the process of establishing a new electric car brand exclusively for the Chinese market, as per insights shared by sources with the Korea Economic Daily.
The brand, internally codenamed OE RE, is expected to be jointly owned, with Hyundai and BAIC each holding a 50% stake. The brand's focus is on providing electric vehicles equipped with cost-effective LFP batteries tailored to meet the specific demands of the Chinese market.
Earlier plans for Hyundai to manufacture electric cars for the BAIC brand Arcfox in China at their joint venture plant in Beijing faced financial challenges, leading to its abandonment, according to sources cited in the article. Arcfox, a premium brand established by the Chinese car manufacturer in 2017, would have marked the first instance of Hyundai producing cars for a brand outside its corporate group. The initial rationale behind the strategy was to enhance the capacity utilization of Hyundai's Chinese plants, currently operating at below 50%.
An earlier report in the Korea Economic Daily indicated that Hyundai had initially considered introducing electric models of its Ioniq brand in China. However, this plan was reportedly discarded due to concerns about competing with its own brand in a market dominated by Chinese electric car manufacturers like BYD.
The latest move to create a dedicated electric car brand for the Chinese market aligns with the initiative launched by Beijing Hyundai Motor in June 2023, aiming to introduce up to five electric models within three years.
China poses challenges for Hyundai, partly influenced by political factors. The Korea Economic Daily notes that Hyundai's annual car production in China has dwindled from 1.6 million units in 2017 to approximately 250,000.
This decline is attributed to government restrictions imposed on Korean brands following the deployment of the U.S. missile defense system THAAD (Terminal High Altitude Area Defense) in Seoul in 2017. Despite past difficulties, Hyundai has opted to reinvigorate its presence in China, focusing on cleaner vehicle options.