Hyundai outlines electrification plans for Europe

Hyundai has big plans to electrify its European lineup. Along with battery-powered models and plug-in hybrids, the automaker’s product offensive will include an additional twist: fuel cell vehicles. Hyundai Europe Chief Operating Officer Thomas Schmid is overseeing the transition. He shared details with Automotive News Europe Correspondent Andrea Malan.

Could you sum up Hyundai Europe's electrification strategy?

In Europe, we will have 10 electrified models with four full-electric vehicles plus hybrids and plug-in hybrids by 2020. This is the right mix for this transition period.

What's your market outlook for 2022?

I don't believe full electric will be the solution because even five years from now the infrastructure won't be sufficient. You need half an hour to reach an 80 percent recharge, so if you have hundreds of cars on the motorway you would need a lot of charging stations. It will take time. During the transition phase, plug-in hybrids and hybrids will be a solution for long distance travel. For cities, full-electric could work. Altogether, these alternative propulsion modes, including fuel cells, could reach 20 percent of the market in five years.

Won't EVs be too expensive to make them competitive in large cities?

If you want to reach mass production, it's clear that prices have to decrease. For premium brands such as Smart, price is not an issue so for them it might work. As for Hyundai and its competitors, it will depend on the price of components.

Are diesel engines doomed?

Diesel will still exist, although its share will steadily decline across Europe. My forecast is for a 30 percent market share in five years [down from 49.5 percent in 2016, according to industry group ACEA].

Hyundai has also announced a new fuel cell SUV for next year. What are your expectations?

It will have an 800km range, like a normal car, and autonomous capabilities. European sales will start next year. The volume will most likely be in the hundreds, as the demand is higher than what we can deliver. So far, we have 600 fuel cell vehicles on the road in Europe. Hopefully we'll increase it by 100 to 150 units next year.

What is the biggest hurdle for fuel cell vehicles?

Infrastructure. Our main customer is a taxi company in Paris [that ordered 60 units of the ix35 fuel cell in late 2016]. They have a re-fueling station in cooperation with Air Liquide near Pont de l'Alma in Paris. We are also present in Denmark, Norway and in the Munich area of Germany. The infrastructure across Europe is still very fragmented.

What is Hyundai doing to solve the infrastructure problem?

It is a chicken-and-egg problem. We are cooperating with the companies that provide refueling stations. In Munich it is Linde. Denmark currently has the best infrastructure and you can drive across the country using a fuel cell car. In Germany, we only have 36 re-fueling stations. You can't even drive from Frankfurt to Berlin and back. But that's better than Italy, where only one hydrogen fuel station exists, in Bolzano.

Will the slow move to electrified cars allow new entrants step in and perhaps surpass today's established brands over the next 10 years?

I don't believe the landscape will change significantly. On one hand there will be newcomers, for example from China or the U.S., such as Tesla. An electric vehicle is much simpler to manufacture. On the other hand, the deep knowledge of manufacturing processes will remain a competitive advantage. We will still see the current brands, but consolidation will happen: There will be more deals like PSA-Opel, or maybe Fiat Chrysler with a Chinese manufacturer.

In this landscape, how will Hyundai move upscale?

By offering quality, reliability and real customer orientation. Then you have the packaging of the vehicle: connectivity, safety, and so on. In our current i30 we offer the biggest package as standard, although in some markets people simply don't want to spend money on that. Across Europe some features are not so much in demand: in some countries, environmental friendliness is only driven by environment or taxation. The main issues for a car buyer are mobility, then design, then low fuel consumption

How has Hyundai adjusted its priorities?

It's food for thought for us. Does it make sense to strive to get five stars from EuroNCAP when doing so is an electronics issue and not related to the robustness of the car body? We assume [getting a five-star safety rating] is important for the brand image, but we are also learning that it's partly not true. In addition, some safety features can be annoying, such as all the collision and lane departure warnings. This is especially true for middle-aged drivers. We have to find a way to serve customers without annoying them.

How about expanding the product range?

We need products that serve several segments in size and demographics. We know it will not be easy to become the No. 1 Asian brand in Europe, so we have to try and be different. One example is the shrinking small minivan segment where our ix20 will most likely not be replaced at the end of its life cycle. Current owners will then buy a Kona [small SUV], or maybe a different model of the same size, but with a different body style. You will hear more from us next year about this.

There is a rumor that Hyundai wants to purchase Fiat Chrysler. Is that true?

[FCA CEO] Sergio Marchionne knows very well what might be credible rumors because he checks who might have interest. He's probably right. Asia might be the right region, but it's not Hyundai.