Korea's Hyundai Begins Its Hybrid Push

As Hyundai launches its first hybrid model in Korea, it begins its mission to take on Toyota and Honda in the global green car market

By Moon Ihlwan

There's no stopping Hyundai Motor these days. In yet another display of its determination to expand globally, the Korean automaker began selling the world's first LPG (liquefied petroleum gas) hybrid cars on July 8. Although Hyundai will be selling them only in South Korea for now, the LPG hybrids are harbingers of bigger ambitions. Selling the new cars, which start at $16,200, "will be a stepping stone for Hyundai as it prepares to face off against the likes of Toyota and Honda in the global hybrid vehicle markets," says Kim Pil Soo, automotive engineering professor at Daelim College near Seoul,

The introduction of Hyundai's first hybrid electric vehicle coincides with the company's relentless marketing blitz in the U.S. and elsewhere. Last week, for example, it launched a summer gas giveaway promotion in the U.S. that guarantees buyers of its vehicles a year's worth of gas at $1.49 per gallon. Earlier this year it began an "Assurance" program that allows buyers to walk away from a new-car loan without any negative effect on their credit rating if they lose their jobs.

Such aggressive marketing campaigns have helped Hyundai increase its sales in major auto markets. In the U.S., its market share has increased to 4.3% in the first six months of this year against 3.1% a year earlier. In China and the European Union, Hyundai's share jumped to 7.3% (from 5.3%) and to 2.3% (from 1.7%), respectively, in the first five months of 2009.

Now the Korean upstart is waging a catch-up campaign in green cars that's vital to fulfilling its ambition of becoming one of the top five carmakers within two to three years. The first hybrid electric model, largely based on the existing Elantra, makes Hyundai the first carmaker on the planet to offer lithium-ion polymer batteries commercially. Boasts Yang Woong Chul, Hyundai's research and development chief: "We are moving with 'Hyundai speed' to achieve our goal of environmental leadership in our industry and redefining the Hyundai brand as a technological innovator."

Lithium-Ion Leader?

Hyundai says such batteries weigh 35% less than current nickel-metal hydride cells used in Toyota's (TM) Prius and Honda's (HMC) Insight and are 40% smaller. They also last 1.5 times longer than nickel-metal hydride batteries, generate less heat, and are more resilient to shock than other types of lithium-ion batteries. And because the polymer resembles a gel, the batteries don't have to conform to a set shape, allowing engineers to pack the batteries almost anywhere they want on the vehicle, Yang says. The bulkiness of batteries on hybrids has been a problem for engineers for years.

Hyundai certainly isn't an immediate threat to Toyota or any other player in the hybrid markets outside of Korea. The Korean carmaker has no plan to sell the Elantra hybrid in export markets, as only a handful of countries use LPG as fuel for cars. However, it plans to introduce a gasoline-electric hybrid in the U.S. next year based on the next-generation Sonata sedan, using the same battery technology as the Elantra hybrid.

The first test whether Hyundai can defend its home turf against a push from Toyota. The Japanese giant now sells only hybrid SUVs in Korea but is considering introducing the Prius within a year.

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