Hyundai Mobis wins EV component supply deal from VW

South Korea’s Hyundai Mobis Co. has bagged a deal purportedly worth billions of dollars to supply a key electric vehicle component to Volkswagen AG, the world’s second-largest carmaker, as the auto parts maker of Hyundai Motor Group works to reduce its reliance on affiliates.

Hyundai Mobis said on Wednesday it agreed to provide Volkswagen with its battery system assembly (BSA), a core EV component, which will be used for the German automaker’s next-generation platform for the clean vehicles. The South Korean company has yet to disclose financial details, however.

The world’s sixth-largest auto parts supplier is set to build a plant near a Volkswagen factory in Spain to supply BSAs after its board of directors approves the plan this year. The auto part manufacturer is likely to spend 200 million euros ($220 million) on the facility, according to media reports.

The BSA is a complete product that combines a battery pack with the battery management system (BMS) and other components, to ensure the safe and efficient operation of EV batteries.

Hyundai Mobis’ BSA can be used for all eco-friendly vehicles including all-electric automobiles and hybrid cars. Dutch-domiciled multinational automaker Stellantis N.V., the world’s No. 4 automaker, is also known to procure BSAs from Hyundai Mobis.

INCREASING GLOBAL EV PARTS ORDERS

The new factory in Spain is predicted to help Hyundai Mobis win more orders from overseas EV makers, given rapid growth in the world’s eco-friendly vehicle market, industry sources in Seoul said. The company, which is already operating BSA plants in China, the Czech Republic and South Korea, is adding more production bases in the US and Indonesia.

“Mobis is expecting additional orders for electric vehicle components in the global market,” Hyundai Mobis said in a statement.

Hyundai Mobis has been enhancing its electrification competitiveness for a decade since it opened a plant in South Korea dedicated to parts for eco-friendly vehicles in 2013. It became a powerhouse for EVs when electronics and information technology companies have been expanding their presence in the market of components for future automobiles.

The company dropped “Hyundai” from its name for overseas marketing as global carmakers had been reluctant to place orders to the affiliate of Hyundai Motor Co. and Kia Corp. – together the world’s third-largest automaker.

“Hyundai Mobis, which has been seeking for ‘Mobis original,’ is becoming an independent auto parts maker rather than just a manufacturer for Hyundai Motor and Kia,” an industry source said.

Such efforts have ramped up the component maker’s overseas deals. It inked contracts of a record $4.7 billion in total last year with foreign automakers, almost double $2.5 billion in 2021, according to the company. It started supplying key modules for Mercedes-Benz AG’s EVs produced in the US in 2022. Hyundai Mobis’ customers also include BMW, General Motors and BYD Co.

Hyundai Mobis is expected to exceed its overseas order target of $5.4 billion for this year.

“We are trying to secure deals to supply electrification parts including the BSA with other automakers than Volkswagen,” said a company official, adding the company is actively working in North America, Europe and Japan.

The company ranked No. 6 in Automotive News’ list of the world’s largest original equipment suppliers for 2023, beating Aisin Corp., a member of Japan’s Toyota Group, for the first time.

INDEPENDENCE

Hyundai Mobis has been trying to reduce its reliance on Hyundai Motor and Kia. Sales to the automaking affiliates accounted for 77% of Hyundai Mobis’ total revenue in the first half of this year. The company aims to push the rate down to 60% in the longer term.

The dependence was a double-edged sword for Hyundai Mobis. The company enjoyed healthy earnings when the carmakers reported strong profits.

Hyundai Mobis suffered when its affiliates were in trouble, however. The company was in the doldrums when the relationship between South Korea and China soured over a US missile defense system in 2017, dampening sales of Hyundai Motor and Kia on the mainland.

Hyundai Mobis aims to further cut its reliance on the affiliates by winning more orders from foreign automakers to supply not only existing parts such as BMS, EV Chassis and steering systems but also components for self-driving cars and connectivity.

The company earlier this year joined hands with Qualcomm Inc. to develop a controller for Level 3 autonomous vehicles with an aim to produce a software platform for the controller with high-performance semiconductors supplied by the US chip designer.

Write to Il-Gue Kim, Sungsu Bae and Nan-Sae Bin at black0419@hankyung.com
 

Jongwoo Cheon edited this article.