Hyundai Motor's auto shipment, U.S. investment plans hit snag

[Photo by Yonhap]

South Korea’s top carmaker Hyundai Motor Co. has hit a snag with its aggressive EV shipment and massive U.S. investment plans due to the prolonged global chip shortage and its union’s opposition to the company’s $7.1 billion investment plan in the United States, respectively.

According to multiple industry sources, Hyundai Motor on Tuesday suspended the operation of its No. 3 Ulsan factory that makes Avante sedan and small SUV Venue. The factory is said to halt operations again on Thursday due to a shortage of chips that control airbag operation.

The second line at Hyundai Motor’s No. 5 Ulsan factory that produces popular Tucson SUV and hydrogen fuel cell-powered crossover SUV Nexo remained idle on Tuesday following suspension on Monday.

Hyundai Motor last month faced a major setback in production of Grandeur and Sonata sedans and Kona SUV due to chip shortages.

During a conference call after its first-quarter earnings announcement last month, Hyundai Motor already warned of worse chip shortages in May. Customers are also expressing complaints over delays in their car deliveries, with some raising worries that they will not be able to receive government subsidiary before the deadline because of the slow production and delivery of Hyundai Motor’s Ioniq 5 EV.

Hyundai Motor"s Ioniq 5

Its sister company Kia Corp. is also grappling with the chip shortage.

It suspended the operation of its No. 2 Gwangmyung plant that produces subcompact crossover SUV Stonic and Pride sedan for a second day on Tuesday.

Industry insiders noted that Hyundai Motor and Kia are to blame for customer complaints over the delivery delay of their popular new EV models as they rushed to receive pre-orders of Ioniq 5 and EV6 without considering their production capacity in a chip shortage environment that has been lingering since late last year.

Conflict with the labor union is another headache for the automaker group.

The union has expressed opposition against Hyundai Motor Group’s 8 trillion won ($7.1 billion) investment plan in the U.S. ahead of the Korea-U.S. summit on May 21.

Kia"s EV6

Hyundai Motor’s union said in a statement that the management unilaterally unveiled a large-scale investment in the U.S. without discussion with the union with 50,000 members. It demanded the management to focus investment in domestic facilities for new businesses. Kia's union also opposed to the U.S. investment plan, urging the management to present job stability measures through domestic plant investment.

Hyundai Motor Group recently announced to invest $7.4 billion over the next five years in the U.S. The amount includes investments in projects that are already being carried out, such as its acquisition of Boston Dynamics, and to establish hydrogen charging infrastructure.

Sources noted that investment focus in the U.S. is inevitable for Hyundai Motor particularly under the new Joe Biden administration that is placing much focus on environmentally-friendly policies.

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