Hyundai eyes Valeo as new supplier for EV thermal systems

Hyundai Motor Group CI

South Korea’s Hyundai Motor Group is reviewing Valeo SA as a new supplier for its electric vehicle thermal management systems.

Valeo is a globally recognized automotive supplier headquartered in France. The Korean auto giant’s move is seen as a strategy to diversify its supply sources as the importance of thermal management systems, which help regulate heat generated by EV motors and batteries, increases.

According to sources in the auto parts industry on Wednesday, Hyundai Motor Group is currently assessing Valeo as a potential new supplier for its thermal management systems. Hyundai Motor Group’s procurement division is reportedly examining Valeo’s technological capabilities and products from various perspectives.

While no supply contract has been signed yet, industry observers speculate that Valeo could receive new orders from Hyundai Motor Group soon as the Korean company expands its range of EV products. Valeo, a key supplier of various automotive components to Hyundai Motor Group, aims to expand its business by entering the thermal management systems supply chain for Hyundai‘s EVs.

Hyundai Motor Group’s move is interpreted as a strategy to diversify its suppliers for core systems to reduce purchase costs and stabilize the supply chain in the medium to long term via competition among multiple suppliers.

It is known that Hyundai Motor Group typically allocates all volumes for a particular vehicle model to a single supplier when sourcing thermal management systems, a practice considered efficient given the relatively low volume of EVs compared to internal combustion engine vehicles. The company is also known for rigorously verifying supplier products before confirming supply.

Valeo’s entry into the field of EV thermal management systems, which was shared by Hanon Systems Co., Doowon Climate Control Co., and Hyundai Wia Corp., is expected to intensify competition in the market.

Hanon Systems is currently recognized as the largest supplier of thermal management systems for Hyundai Motor Co. and Kia Corp. Doowon Climate Control, Hyundai Wia, and others are also involved in supplying thermal management systems for Hyundai and Kia EVs. DENSO Corp., a Japanese company that produces air conditioning systems for internal combustion engine vehicles, is yet to enter Hyundai Motor Group’s EV business.

Thermal management systems are considered a crucial function of EVs as they manage heat generated by motors and batteries, which directly affects driving range and can interfere with the operation of various electronic devices. Efficient management involves capturing excess heat, recovering its energy, and distributing it where needed, or effectively dissipating excessive heat into the atmosphere.

Although the EV market has experienced slowed growth recently due to temporary stagnation in demand, the market for thermal management systems is expected to grow if the electrification trends continue rapidly. Market research firm Mordor Intelligence said that the market for thermal management systems for motors and vehicle power devices is expected to grow to more than 7 trillion won ($5.08 billion) by 2027.

“We understand that Valeo is actively striving to enter Hyundai Motor Group‘s supply chain for thermal management systems,” an industry insider said.