The First Verdict On Hyundai's Major Electric Car Sales Push

Anton Wahlman profile picture
Anton Wahlman
6.93K Followers

Summary

  • Hyundai launched its all-new high-end all-electric car platform in mid-late 2021, and the time has come to render the initial verdict.
  • As of March 2022, the combined Hyundai-Kia sales rate for these electric cars has reached 240,000 per year.
  • With the Genesis version being added this quarter, we can extrapolate to an annual sales rate of approximately 300,000 units per year.
  • This took less than one year to achieve. It may be the quickest sales ramp in electric car history from this kind of launch.
  • From a valuation perspective, how would you value an electric car franchise that went from zero to 300,000 in a year and with a quick path to 2 million units?

Hyundai Ioniq5 Hatchback

shaunl/iStock Unreleased via Getty Images

Hyundai (OTCPK:HYMTF), which also operates the Kia (OTCPK:KIMTF) and Genesis brands, is one of the world’s largest automakers, rapidly catching up with volume leaders Toyota (TM) and Volkswagen (OTCPK:VWAGY) (OTCPK:VLKAF). While the Hyundai Group’s largest factories are in Korea, it also operates them in Georgia, Alabama, India, and Turkey, among other places.

Hyundai and Kia have been selling electric cars for a few years already, but volume manufacturing of its dedicated battery-electric vehicle (BEV) platform started only in 2021, with deliveries beginning not until mid-late 2021. As a result, now that the first quarter of 2022 is over, and we have not only full Q1 numbers available but also April month sales results from selected geographies, it is time to make the first assessment of Hyundai’s electric car effort.

Before 2021, Hyundai’s BEV efforts had mainly consisted of the Hyundai IONIQ BEV, the Hyundai KONA BEV, and the Kia Niro BEV. These vehicles were relatively successful, and two of them had solid ranges around 260 miles. They were all front-wheel drive, with only moderate amount of horsepower, and were not considered “exciting” either in design or on some other performance or other metrics.

It is important to understand that Hyundai-Kia is not giving up completely on these “older” BEV platforms and versions. For example, it just introduced a new generation of the Kia Niro BEV.

Yet, Hyundai-Kia-Genesis introduced an all-new generation BEV-only platform that has much faster charging, higher performance, and is yielding larger, faster, and more capable vehicle variants. Initially, there are three variants:

  • Hyundai IONIQ 5: Starting price $45,245.

  • Kia EV6: Starting price $42,155

  • Genesis GV60: US pricing imminent.

As you will see in the tables below, the Hyundai IONIQ 5 went on sale in geographies outside the U.S. in May 2021, the Kia EV6 in September 2021, and the Genesis GV60 may already be on sale outside the U.S. but is imminent in the U.S. market this quarter.

In an age of cost-cutting and scale economies, it is worth commenting on the (lack of) total similarity between the Hyundai, Kia, and Genesis versions. Let’s contrast this with the Toyota-Subaru (OTCPK:FUJHF) (OTCPK:FUJHY) electric cars, as they are really the same vehicle with only the tiniest cosmetic differences (grille, badge, etc.). Even a layperson will see immediately that it’s the same car.

Not so with Hyundai-Kia-Genesis. These three vehicles don’t share a body, as all the dimensions are different, the doors and interiors are different, and so forth. This goes for everything from wheelbase to type of standard heat pump. Yes, the basic electric architecture and electric drivetrain components are identical or almost identical, but the regular layperson would not know that they come from the same platform. They look completely different.

Hyundai IONIQ 5

This vehicle is not to be confused with one of Hyundai’s previous BEVs, the IONIQ BEV. These two vehicles -- IONIQ BEV and IONIQ 5 -- may not have a single component in common, not just design. There are no similarities under the skin either.

With the first deliveries of the IONIQ 5 beginning in May 2021, here are the sales results thus far:

IONIQ 5

World

Europe

Europe %

Norway

Netherlands

Sweden

Spain

USA

USA %

2022-4-

288

119

23

111

2,677

2022-3-

10,848

3,355

31%

590

148

57

94

2,700

25%

2022-2-

9,284

3,354

36%

456

126

63

101

2,555

28%

2022-1-

5,716

3,407

60%

475

68

112

102

989

17%

2021-12-

7,294

5,024

69%

441

904

575

81

153

2%

2021-11-

6,836

3,989

58%

475

392

106

73

2021-10-

7,251

3,720

51%

595

147

107

118

2021-9-

6,754

3,732

55%

652

69

36

77

2021-8-

5,472

2,321

42%

629

64

60

23

2021-7-

5,924

432

96

8

29

2021-6-

222

21

28

2021-5-

63

Data sources: Monthly company sales reports, EU-EVS.com, and cleantechnica.com

As you can see in the table above, US sales began seven months after Norway and some other parts of the world. Europe as a whole constituted between 42% and 69% of total global IONIQ 5 sales until the end of 2021 and has since fallen to 31% largely as the U.S. has increased to 25% of the total, from zero before December 2021.

Total global sales have grown from around 6,000 a month in July 2021, to almost 11,000 in March 2022. Much of that increase happened once U.S. sales ramped in January.

Kia EV6

The Kia EV6 is totally different from the Kia Niro BEV, which has been successful in its own right in many geographies. It shares the Hyundai IONIQ 5 platform and most drivetrain components, but has a completely different look, not just on the outside but in terms of the interior too. The wheelbase isn’t even the same.

Deliveries started a few months after the Hyundai IONIQ 5:

Kia EV6

World

Europe

Europe %

Norway

Netherlands

Sweden

Spain

USA

USA %

2022-4-

143

345

420

101

2632

2022-3-

9,046

3,116

34%

77

266

282

140

3156

35%

2022-2-

5,460

2,244

41%

190

160

198

91

2125

39%

2022-1-

3,442

3,192

93%

355

109

293

92

2021-12-

5,072

3,129

62%

101

885

231

75

2021-11-

2,651

110

476

355

87

2021-10-

79

285

11

47

2021-9-

70

Data sources: Monthly company sales reports, EU-EVS.com, and cleantechnica.com

In a few short months, the Kia version has almost caught up with the Hyundai IONIQ 5 in terms of global sales -- 9,046 units per month as compared to almost 11,000. US sales are a higher percentage of global sales -- 35% instead of 25% -- but not at the expense of European sales, 34% vs 31% for the Hyundai. Therefore, it’s clear that the Kia EV6 is selling dramatically less outside the US and Europe, compared to the Hyundai.

Genesis GV60

Deliveries in some geographies may have just begun and should begin in the U.S. at some point in the second quarter. US pricing is not yet out but should be imminent. May or June may be the first month with meaningful sales statistics for this vehicle.

Overall sales volume: 240,000 per year and growing

Combined Kia and Hyundai BEV sales from these two “sister” models are now running at approximately 20,000 units per quarter, globally. That’s 240,000 per year. The Genesis GV60 will add to these numbers. Maybe the total will be closer to 300,000 units per year.

This is materially higher than the Hyundai Group’s initial guidance, over a year ago. Hyundai has under-promised and over-delivered.

Valuation perspective: Undervalued electric car business unit inside Hyundai

These two BEV models alone, plus the imminent arrival of the third (Genesis-branded) version, appear to result in an annualized rate of sales close to 300,000 units after only one year in operation. Look around the worldwide car industry, and you will not find many other BEV franchises that have scaled this far, this fast. Whether you measure this ramp against Tesla (TSLA) or any of the multi-billion dollar BEV startup pure plays, this would translate into a valuation in the hundreds of billions of dollars -- much larger than all of the Hyundai Car Group in total, which is absurd.

Of course, by regular internal combustion engine (ICE) measurements, the valuation would be at least a full decimal point lower, so both of these valuation approaches can’t simultaneously be right. That’s the insane valuation discrepancy inside the automotive industry these days -- and has been ever since Tesla’s initial valuation jump in April 2013.

This is not the end of the Hyundai BEV story

Hyundai, Kia, and Genesis will launch so many other BEVs over the next three years that it will be almost impossible to remember all the new BEV models and to keep up. If Hyundai can ramp to a 300,000 unit per year sales rate with these first three models so quickly, within approximately one year, then we will soon see the Hyundai Group pass not only one million in annual BEV sales, but before the end of this decade also two million per year. The Hyundai Group will soon be in a close fight for being the world’s largest BEV company -- at least outside of China.

So, tell me again, with Tesla selling one million cars last year and perhaps 1.5 million this year, what should Hyundai’s BEV business be worth as it will soon catch up and pass Tesla’s sales numbers?

This article was written by

Anton Wahlman profile picture
6.93K Followers
I am a former sell-side analyst -- UBS 1996-2002, Needham 2002-2006 and ThinkEquity 2006-2008. These days I review automobiles and other technology products, as well as analyze the automotive and technology industries, and coming up with long/short ideas. I also continue to write (less frequently) on macroeconomics and politics.
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author had no positions in any of the companies mentioned. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

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