Genesis will add hybrids to diversify electrified lineup

Genesis will add hybrid powertrains to its lineup to adapt to shifting consumer demand, making it one of only two premium automakers offering the technology.

The premium brand was previously focused on transitioning directly from internal combustion to electric vehicles, but the new move positions hybrids as a bridge technology.

Its parent company, Hyundai Motor Co., said Aug. 28 it will introduce two new gasoline-electric drivetrains: a next-generation version of its existing hybrid system and a new extended-range electric vehicle system, or EREV, that uses an electric motor to power the wheels and an internal combustion engine to recharge the motor's battery.

The pivot, announced by Hyundai CEO Jaehoon Chang in Seoul at the company's annual Investor Day strategy briefing, is motivated by evolving market conditions and a recent slowdown in sales growth for EVs.

Both systems will eventually be used in all models across Genesis' portfolio except for dedicated EVs. While the South Korean automaker said it planned to put the upgraded hybrid system into Hyundai-branded vehicles starting January 2025, it did not specify timing for Genesis.

The company also said it would bring the extended-range EV system to the North American market by the end of 2026 for midsize crossovers from both Genesis and Hyundai.

Consumer demand for conventional gasoline-electric hybrids has increased this year as EVs remain unaffordable to most mainstream consumers, and the build-out of the EV charging infrastructure has been slow going.

"Customers who live in Los Angeles or the smile states, where there's more charging infrastructure, are embracing electric vehicles. But if they're in the middle of the country, for example, a hybrid is more their speed," Ash Corson, director of product planning for Genesis, told sibling publication Automotive News this month.

Corson's group has been working closely with dealers so the brand can bring the "the right product at the right time in the right place."

Adding hybrids is part of that plan, he said.

The news comes months after Hyundai Motor North America CEO Jose Muñoz said the company intends to add hybrid production to the EV and battery plant it's constructing in Bryan County, Ga. The Metaplant is expected to open in October and will build EVs for Hyundai, Genesis and Kia.

Across the industry, U.S. hybrid sales increased 34 per cent through July, accounting for 9 percent of all new vehicle sales, according to data from Motor Intelligence. Hybrids represented seven per cent of all U.S. sales during the same period last year. Simmilar data for Canada wasn't available.

Genesis can tap Hyundai Motor Group's toolbox of hybrid technologies.

The Hyundai brand, for example, already has a well-rounded portfolio of hybrid crossovers and sedans. Through July, U.S. sales of Hyundai's four hybrids were up 28 per cent and represented 14 per cent of Hyundai's total volume — up from 11 per cent the year-ago period.

"Automakers around the world are finally realizing that there is a necessary step in between fully gas-powered and fully electric," said Sam Fiorani, vice president of automotive data firm AutoForecast Solutions.

"Genesis can use the motor and battery technology currently under development to make better hybrids that improve the luxury car experience," Fiorani said.

Lexus is the only luxury automaker that offers standard gasoline-electric hybrid powertrains, though a handful offer plug-in hybrids. The brand successfully leveraged the hybrid system of its parent company, Toyota Motor Corp., which pioneered the technology in the Toyota Prius.

Lexus currently offers the alternative powertrain in seven of its models. Hybrids accounted for 30 per cent of the brand's U.S. total sales the first seven months of the year; Lexus' hybrid volume increased 30 per cent in the same period. Toyota Canada didn't break down its first-half sales.

Genesis current global goal is to eliminate the sale of new gasoline-powered models by 2025 on the path to becoming all electric by 2030.

A Genesis spokesperson said they are not making changes to its current commitments "for the time being."

"Genesis has already softened its outlook for EVs, giving it room to launch hybrids over the rest of this decade," Fiorani said.

He expects Genesis to delay its plans for all new-vehicle launches to be purely electric to 2030 or later. It depends on "political pressure and just how quickly mainstream buyers adopt EVs," he said.

Hyundai Motor Group is spending US $7.6 billion to build its Metaplant based on a dedicated EV platform called IMA. That next-generation platform will succeed the E-GMP platform that currently underpins EVs from Hyundai, Genesis and Kia.

But with hybrids on the table, the group may be engineering the platform so that it can accommodate hybrids as well as EVs.

"While IMA is going to be EV-forward, it's very likely that it will evolve for the potential of hybridization, and its replacement could be fully electric," Fiorani said.

"We've heard of many platforms that were announced to be EV only but would later add an engine," he said.

Fiorani noted that the first announcements for Stellantis' STLA platforms focused on its EV models. But as production approached, they evolved to include internal combustion engines in hybrid and extended-range EV setups.

"Dynamic platforms," he said, "are the necessary transitional step for many manufacturers over the next decade."