How Did Hyundai Get So Cool?
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How Did Hyundai Get So Cool?

Korean carmaker known for budget brands becomes EV innovator; sets sights on Tesla

Tue, May 23, 2023 8:46amGrey Clock 6 min

Hyundai Motor was dreaming up an answer to Tesla when the company’s top executive sent its lead designer a photo of a bizarre-looking car that last rolled off assembly lines more than 70 years ago.

The Stout Scarab, manufactured in Michigan in the 1930s and 1940s, looked like an outlandish cross between a bus and a pontoon.

“Let’s face it, 10 years ago, our design strategy was all about the fast follower,” said SangYup Lee, the Hyundai designer. He said Euisun Chung, executive chair of Hyundai and its affiliate Kia, who sent the photo, wanted to stop imitating and get ahead of rivals.

“The message was: Inspiration can come from anywhere,” said Lee.

The Hyundai electric car that drew inspiration from the Scarab’s eye-catching streamline design, the Ioniq 6, has been a hit with critics. At the New York auto show in April, it was voted World Car of the Year.

Hyundai and Kia, the sibling Korean carmakers, have long had a reputation for making inexpensive, uninspiring cars. Over the past few years, though, they have become one of the leaders in the electric-vehicle race, with models that are turning heads at rival car companies—and among car buyers.

Asked last year about competition in the EV sector, Ford Motor Chief Executive Jim Farley said: “The ones I’m paying the most attention to are Hyundai/Kia, the Chinese and Tesla. That’s my list.”

Behind the push has been Chung, 52 years old, who has pressed for investment in EVs and moonshot technologies such as flying cars and robots. In 2020, he took control of the Hyundai Motor Group,one of Korea’s largest family-run conglomerates, from his father, Chung Mong-Koo.

Last year, Hyundai became the world’s third-largest automaking group, with 6.85 million vehicles sold, behind only Toyota Motor and Volkswagen. Now, the company, currently the third-largest seller of EVs in the U.S., is setting its sights on Tesla.

Tesla’s enormous success with its Model 3 showed the industry that the EV market was much bigger than many people thought, spurring Hyundai and Kia to move faster, said Michael O’Brien, a former vice president at Hyundai. “Hyundai leadership realises that the EV market is a jump ball,” he said.

Chung, whose grandfather founded the business 76 years ago, has told employees repeatedly that the company needs to be more forward-leaning. “We will not fear risks and only be reactive,” he told workers in January.

Hyundai and Kia have gone on a hiring spree, luring high-profile designers from other carmakers, including from German luxury brands. Their aim is to make their vehicles look and feel more luxurious.

Ford’s Farley lauded Hyundai’s Ioniq 5, which came out 2021, noting that some software features were better than Ford’s own. “That company has really found their stride with electric vehicles,” he said.

Tesla’s Elon Musk said last summer in a tweet about the EV market: “Hyundai is doing pretty good.”

Hyundai and Kia are a part of a conglomerate that also owns steel mills, shipyards and construction firms. It is largely controlled by Chung’s family through their shareholdings in the motor company and other affiliates.

The company got started in the auto business in 1967, when the country was still recovering from the Korean War, at first doing contract work for Ford. Its first in-house vehicles, the Pony and Excel, were inexpensive and so prone to quality problems that they became fodder for comedians on late-night TV.

Kia began in 1944 as a manufacturer of metal parts and bicycles, and a decade later, licensed versions of Honda motorcycles and Mazda trucks and cars. After it declared bankruptcy in 1997, Hyundai purchased a controlling stake. It now owns nearly 34%.

Hyundai entered the U.S. car market in 1986, followed by Kia in 1993. Both were budget brands. When Chung’s father took over in 1996, he made solving quality woes a priority, overhauling manufacturing operations.

Decisions were made mostly by executives in Seoul, far from the U.S. market that was driving the bulk of profits, former executives said. “Hyundai was always known in Korea as the most conservative and the most militarylike,” said Frank Ahrens, Hyundai’s former head of communications. He likened directives from the chairman to imperial decrees. “If you want a pyramid, that’s a way to do it—get a whole bunch of people pushing in the right direction,” he said.

Both Hyundai and Kia were slow to react to the SUV boom in the U.S., despite pleas from stateside executives, the former executives said. For years, they didn’t do much to expand their U.S. factories, leaving them struggling to build enough vehicles when demand surged for popular models such as the Hyundai Santa Fe and Tucson.

Another embarrassment was a surge in auto thefts following a social-media challenge that targeted certain Hyundai and Kia models as easy to steal. Several states and insurers have sued the companies over the thefts. On Thursday, Hyundai and Kia agreed to pay up to $200 million to owners of stolen cars to settle a class-action lawsuit.

When the Korean leadership takes notice, though, decisions are fast-tracked and change can come swiftly, former executives said. “They’ll throw a new engine in whenever the engine is ready,” said JP Garvey, a Hyundai and Kia dealer in New York. “They constantly make tiny incremental changes, and they don’t stop.”

At the New York auto show in April, Hyundai’s luxury brand, Genesis, showed off a sportier version of its new GV80 SUV. The vehicle was a concept car—not one Genesis intended to make.

It was such a hit that the bosses in Korea decided that night to put it into production, said José Muñoz, Hyundai’s president and chief operating officer, whom Chung hired from Nissan Motor in 2019. “There are no arguments,” Muñoz said. “Once the decision is made, execution is very fast.”

Chung has installed overseas executives in key management positions. He hired designer Peter Schreyer from Volkswagen, where he had helped redesign the iconic Beetle, then promoted him to president, the first non-Korean to reach that level in Hyundai’s history.

“The chairman wanted something new, and the focus was on good styling,” said Ray Ng, a former Kia designer who worked closely with Schreyer.

Chung’s biggest push has been with EVs, a sector Hyundai and Kia entered in 2010 when Hyundai released the Blueon in Korea. Kia followed with the Ray EV in 2011. A second model, an electric Kia Soul, went on sale in the U.S., Europe and South Korea in 2014, two years before General Motors released its rival Chevy Bolt.

The EV market presents unique challenges. Nearly all Hyundai and Kia EVs are built outside the U.S. Recent revisions to the $7,500 federal tax credit in the U.S. for EV purchases have made foreign-built EVs ineligible for the subsidy. Sales in the U.S. of Hyundai and Kia EVs have been declining since the tax revisions.

A new $5.5 billion factory complex is in the works for both Hyundai and Kia to build EVs in Georgia, but it won’t open until the end of next year, at the earliest.

Tesla’s success with the Model 3, which came to market in 2017, opened eyes at Hyundai, said O’Brien, the former vice president. “Everyone saw they went from a niche player to a core player in one model,” he said. “People in Korea, and Hyundai, saw Tesla as a tech company rather than a car company. Rather than focusing on four wheels, oil and brakes, they were focused on technology, and that was very appealing in Korea.”

While other automakers dithered about whether the batteries were too expensive and short on range, Chung was undeterred, O’Brien said.

After Chung became executive chairman in 2020, Hyundai and Kia announced plans to introduce 31 battery-powered models. The companies aim to become the third-largest seller of EVs globally by 2030. Tesla and China’s BYD are the current global leaders.

That the Hyundai Ioniq 6 took inspiration from the Stout Scarab is one example of how the company is leaning on design to set it apart from rivals. Lee, the designer, said the streamlined shape recalls the period in the 1930s and 1940s when car design borrowed from the aerospace industry.

The design has the added benefit of tacking on miles to the car’s range, giving it one of the lowest drag coefficients in the industry—a measure of how aerodynamic a shape is.

When interest in EVs surged during the pandemic, Hyundai and Kia were among the few car companies that had a selection of electric and hybrid models on dealership lots. On top of that, the companies had stockpiled semiconductors, allowing them to avoid the worst of the supply-chain related shutdowns in recent years, giving them more stock to sell, dealers said.

Hyundai and Kia have said that most of their EV customers are coming to the brand for the first time. They also tend to be wealthier than customers of the companies’ other models. Last year, the biggest cohort of Hyundai Ioniq 5 and Kia EV6 buyers earned more than $250,000 a year, compared with between $50,000 and $75,000 for all models, according to data from S&P Global Mobility.

Andrew Mancall, a doctor from Portland, Maine, is among the Hyundai converts. A former Audi owner, he wanted to buy an EV for his next car and put himself on a number of waiting lists, including for the Ford Mustang Mach-E.

When his number came up for the Mach-E, he passed on it and bought the Hyundai Ioniq 5. He said he was sold on the driving dynamics and what he described as better technology than on the Ford. After a nine-month wait, he took delivery of his Hyundai.

“Am I a Hyundai person? A couple years ago, I probably would have said no,” he said. “I guess the answer now is, yes.”

—Mike Colias contributed to this article.


Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

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How far can an electric car really go on a full charge? What can you do to make it go farther? We answer these and other questions that EV buyers might ask.

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Many people considering an electric vehicle are turned off by their prices or the paucity of public charging stations. But the biggest roadblock often is “range anxiety”—the fear of getting stuck on a desolate road with a dead battery.

All EVs carry window stickers stating how far they should go on a full charge. Yet these range estimates—overseen by the Environmental Protection Agency and touted in carmakers’ ads—can be wrong in either direction: either overstating or understating the distance that can be driven, sometimes by 25% or more.

How can that be? Below are questions and answers about how driving ranges are calculated, what factors affect the range, and things EV owners can do to go farther on a charge.

How far will an electric vehicle go on a full battery?

The distance, according to EPA testing, ranges from 516 miles for the 2023 Lucid Air Grand Touring with 19-inch wheels to 100 miles for the 2023 Mazda MX-30.

Most EVs are in the 200-to-300-mile range. While that is less than the distance that many gasoline-engine cars can go on a full tank, it makes them suitable for most people’s daily driving and medium-size trips. Yet it can complicate longer journeys, especially since public chargers can be far apart, occupied or out of service. Plus, it takes many times longer to charge an EV than to fill a tank with gas.

How accurate are the EPA range estimates?

Testing by Car and Driver magazine found that few vehicles go as far as the EPA stickers say. On average, the distance was 12.5% shorter, according to the peer-reviewed study distributed by SAE International, formerly the Society of Automotive Engineers.

In some cases, the estimates were further off: The driving range of Teslas fell below their EPA estimate by 26% on average, the greatest shortfall of any EV brand the magazine tested. Separately, federal prosecutors have sought information about the driving range of Teslas, The Wall Street Journal reported. Tesla didn’t respond to a request for comment.

The study also said Ford’s F-150 Lightning pickup truck went 230 miles compared with the EPA’s 300-mile estimate, while the Chevrolet Bolt EV went 220 miles versus the EPA’s 259.

A GM spokesman said that “actual range may vary based on several factors, including things like temperature, terrain/road type, battery age, loading, use and maintenance.” Ford said in a statement that “the EPA [figure] is a standard. Real-world range is affected by many factors, including driving style, weather, temperature and if the battery has been preconditioned.”

Meanwhile, testing by the car-shopping site Edmunds found that most vehicles beat their EPA estimates. It said the Ford Lightning went 332 miles on a charge, while the Chevy Bolt went 265 miles.

That is confusing. How can the test results vary so much?

Driving range depends largely on the mixture of highway and city roads used for testing. Unlike gasoline-powered cars, EVs are more efficient in stop-and-go driving because slowing down recharges their batteries through a process called regenerative braking. Conversely, traveling at a high speed can eat up a battery’s power faster, while many gas-engine cars meet or exceed their EPA highway miles-per-gallon figure.

What types of driving situations do the various tests use?

Car and Driver uses only highway driving to see how far an EV will go at a steady 75 mph before running out of juice. Edmunds uses a mix of 60% city driving and 40% highway. The EPA test, performed on a treadmill, simulates a mixture of 55% highway driving and 45% city streets.

What’s the reasoning behind the different testing methods?

Edmunds believes the high proportion of city driving it uses is more representative of typical EV owners, says Jonathan Elfalan, Edmunds’s director of vehicle testing. “Most of the driving [in an EV] isn’t going to be road-tripping but driving around town,” he says.

Car and Driver, conversely, says its all-highway testing is deliberately more taxing than the EPA method. High-speed interstate driving “really isn’t covered by the EPA’s methodology,” says Dave VanderWerp, the magazine’s testing director. “Even for people driving modest highway commutes, we think they’d want to know that their car could get 20%-30% less range than stated on the window sticker.”

What does the EPA say about the accuracy of its range figures?

The agency declined to make a representative available to comment, but said in a statement: “Just like there are variations in EPA’s fuel-economy label [for gas-engine cars] and people’s actual experience on the road for a given make and model of cars/SUVs, BEV [battery electric vehicle] range can exceed or fall short of the label value.”

What should an EV shopper do with these contradictory range estimates?

Pick the one based on the testing method that you think matches how you generally will drive, highway versus city. When shopping for a car, be sure to compare apples to apples—don’t, for instance, compare the EPA range estimate for one vehicle with the Edmunds one for another. And view all these figures with skepticism. The estimates are just that.

Since range is so important to many EV buyers, why don’t carmakers simply add more batteries to provide greater driving distance?

Batteries are heavy and are the most expensive component in an EV, making up some 30% of the overall vehicle cost. Adding more could cut into a vehicle’s profit margin while the added weight means yet more battery power would be used to move the car.

But battery costs have declined over the past 10 years and are expected to continue to fall, while new battery technologies likely will increase their storage capacity. Already, some of the newest EV models can store more power at similar sticker prices to older ones.

What can an EV owner do to increase driving range?

The easiest thing is to slow down. High speeds eat up battery life faster. Traveling at 80 miles an hour instead of 65 can cut the driving range by 17%, according to testing by Geotab, a Canadian transportation-data company. And though a primal appeal of EVs is their zippy takeoff, hard acceleration depletes a battery much quicker than gentle acceleration.

Does cold weather lower the driving range?

It does, and sometimes by a great amount. The batteries are used to heat the car’s interior—there is no engine creating heat as a byproduct as in a gasoline car. And many EVs also use electricity to heat the batteries themselves, since cold can deteriorate the chemical reaction that produces power.

Testing by Consumer Reports found that driving in 15- to-20-degrees Fahrenheit weather at 70 mph can reduce range by about 25% compared to similar-speed driving in 65 degrees.

A series of short cold-weather trips degraded the range even more. Consumer Reports drove two EVs 40 miles each in 20-degree air, then cooled them off before starting again on another 40-mile drive. The cold car interiors were warmed by the heater at the start of each of three such drives. The result: range dropped by about 50%.

Does air conditioning degrade range?

Testing by Consumer Reports and others has found that using the AC has a much lower impact on battery range than cold weather, though that effect seems to increase in heat above 85 degrees.

I don’t want to freeze or bake in my car to get more mileage. What can I do?

“Precondition” your EV before driving off, says Alex Knizek, manager of automotive testing and insights at Consumer Reports. In other words, chill or heat it while it is still plugged in to a charger at home or work rather than using battery power on the road to do so. In the winter, turn on the seat heaters, which many EVs have, so you be comfortable even if you keep the cabin temperature lower. In the summer, try to park in the shade.

What about the impact from driving in a mountainous area?

Going up hills takes more power, so yes, it drains the battery faster, though EVs have an advantage over gas vehicles in that braking on the downside of hills returns juice to the batteries with regenerative braking.

Are there other factors that can affect range?

Tires play a role. Beefy all-terrain tires can eat up more electricity than standard ones, as can larger-diameter ones. And underinflated tires create more rolling resistance, and so help drain the batteries.

Most EVs give the remaining driving range on a dashboard screen. Are these projections accurate?

The meters are supposed to take into account your speed, outside temperature and other factors to keep you apprised in real time of how much farther you can travel. But EV owners and car-magazine testers complain that these “distance to empty” gauges can suddenly drop precipitously if you go from urban driving to a high-speed highway, or enter mountainous territory.

So be careful about overly relying on these gauges and take advantage of opportunities to top off your battery during a multihour trip. These stops could be as short as 10 or 15 minutes during a bathroom or coffee break, if you can find a high-powered DC charger.

Before embarking on a long trip, what should an EV owner do?

Fully charge the car at home before departing. This sounds obvious but can be controversial, since many experts say that routinely charging past 80% of a battery’s capacity can shorten its life. But they also say that charging to 100% occasionally won’t do damage. Moreover, plan your charging stops in advance to ease the I-might-run-out panic.

So battery life is an issue with EVs, just as with smartphones?

Yes, an EV battery’s ability to fully charge will degrade with use and age, likely leading to shorter driving range. Living in a hot area also plays a role. The federal government requires an eight-year/100,000-mile warranty on EV batteries for serious failure, while some EV makers go further and cover degradation of charging capacity. Replacing a bad battery costs many thousands of dollars.

What tools are available to map out charging stations?

Your EV likely provides software on the navigation screen as well as a phone app that show charging stations. Google and Apple maps provide a similar service, as do apps and websites of charging-station networks.

But always have a backup stop in mind—you might arrive at a charging station and find that cars are lined up waiting or that some of the chargers are broken. Damaged or dysfunctional chargers have been a continuing issue for the industry.

Any more tips?

Be sure to carry a portable charger with you—as a last resort you could plug it into any 120-volt outlet to get a dribble of juice.


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Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

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