Hyundai Motor Forecasts Strong EV Growth Following Surge In Quarterly Profits

Hyundai Motor Co said on Thursday that it expects strong backorder demand in major car markets and expects rapid growth in electric vehicle sales, including in the United States, where regulatory concerns have clouded its outlook. The South Korean manufacturer of the Ioniq 5 model is aiming for a 54% increase in global EV sales to 330,000 in 2023, with US electric car sales increasing 150% to 73,000, accounting for 9% of total US vehicle sales.

The plans were revealed during the automaker's fourth-quarter earnings call, where it reported a tripling of net profit, albeit one that fell short of expectations. It also announced the cancellation of treasury shares equal to 1% of its outstanding stock. "Strong earnings continued in the fourth quarter, thanks to increased sales volume and solid sales of high-margin vehicles, as well as favourable exchange rates," said executive vice president Seo Gang Hyun.

Hyundai, like many other automakers, benefited from a lack of new vehicles last year, which kept retail prices high. Seo also mentioned that its results benefited from a higher global plant utilisation rate excluding China, which increased 7.6 percentage points to 96.8% from the previous quarter.

On a 24% increase in revenue, net profit tripled to 1.7 trillion won (US$1.4 billion) from October to December. Profit growth appeared to be especially strong because Hyundai booked one-time costs in the same period last year. However, this fell short of a Refinitiv SmartEstimate of 2.5 trillion won derived from 18 analysts, owing in part to a larger non-recurring loss that the automaker did not elaborate on. Concerns have been raised about the impact of President Joe Biden's Inflation Reduction Act, which excludes Korean automakers from federal tax credits because they do not yet manufacture EVs in North America.

However, Jose Fernandez, the under secretary of state for economic growth, energy and the environment, told an event at a Washington-based think tank this week that Washington is looking "for ways to try and ameliorate some of what (Koreans) believe are unfair consequences". These remarks, which were reported in South Korean media on Wednesday and Thursday, as well as Hyundai's upbeat targets, helped Hyundai's shares end the day 5.6% higher, while Kia's rose 6.6%.

This year, Hyundai expects revenue to increase by 10.5% to 11.5%. It anticipates a 9.6% increase in North American vehicle sales and a 20.5% increase in China vehicle sales. It also hinted at a potential increase in its operating profit margin, predicting a margin of 6.5% to 7.5%, up from 6.9% last year.

Hyundai's plans come on the heels of Tesla Inc's positive outlook, which stated that its aggressive price cuts have sparked a surge in demand for its vehicles.