Hyundai is undecided where it will expand EV manufacturing; Canada ‘on the list’

Canada is “on the list” for a potential Hyundai Motor Co. manufacturing footprint, as the South Korea-based automaker pursues sales growth in North America through a fast-expanding lineup of electric vehicles.

Hyundai’s current priority is its first North American EV assembly plant under construction in Georgia, said Hyundai Auto Canada CEO Don Romano, but “step two” of the company’s EV plans for the region haven’t been decided.

“Canada’s going to be part of that conversation,” Romano told Automotive News Canada.

A series of talks with Canadian officials have already taken place, he added, though they’ve run alongside discussions with governments in the United States and Mexico.

“Canada is on the list for future growth … [but] we’re going to obviously go to where we see the most advantageous future for electric vehicles.”

Today, Hyundai is Canada’s highest volume automaker without a significant manufacturing footprint in the country.

Including the Hyundai, Kia and Genesis brands that fall under the company’s wider corporate umbrella, Hyundai sold 186,566 vehicles in Canada in 2022, according to the Automotive News Research & Data Center.

That tally puts the company in fourth place on volume, behind Ford Motor Co., General Motors and Toyota, and just ahead of Stellantis and Honda, which all build vehicles in Canada. Volkswagen Group, which recently announced plans to build a $7 billion battery cell plant in Ontario, ranks seventh.

As Hyundai explores next steps for its North American EV production footprint, Ottawa has been busy courting automotive and battery supply chain investments. Hyundai, which became the world’s third-largest automaker by volume last year, hasn’t been left off the call sheet.

On a trip to South Korea in May, François-Philippe Champagne met with officials from the company. Canada’s minister of innovation, science and industry pledged in a tweet to “keep working together to expand and collaborate” in the EV and critical minerals sectors. Champagne’s office would not delve further into who on Hyundai’s global leadership team the minister met with, or what was discussed.

'A LOT' OF CONVERSATIONS

Romano said Hyundai has had “a lot” of such conversations with government.

And while Hyundai’s focus is on Georgia today, the US $5.5 billion plant, going up northwest of Savannah, is unlikely to produce enough vehicles to meet government EV targets on its own, he added.

This need for a larger North American footprint could lead Hyundai to Canada, said Sam Fiorani, vice-president of global vehicle forecasting at U.S.-based AutoForecast Solutions.

“Canada is now pushing for an EV future. It makes a lot of sense to piggyback off of the battery plants and the technology, and the good people who are there to provide R&D, to provide assembly work [and] to provide supplier parts.”

Fiorani forecasts Hyundai will need to add to its assembly ecosystem in North America in the early 2030s, and possibly sooner.

“They should have enough capacity for 2030, but it all depends on how quickly they can expand in this marketplace. Hyundai has done a great job of expanding over the last 30 to 35 years, and if it continues to grow like this, they will need more plants.”

But Canada is just one of many possible options for the automaker, Fiorani added. He expects Hyundai’s site search to extend beyond its emerging EV hub in Georgia, which will soon include the new assembly plant and a nearby battery cell manufacturing joint venture with LG Energy Solution worth US $4.3 billion.

“When you establish a new plant, typically there’s an unemployment issue in the area and it’s easy to get workers. But once you start adding a few thousand jobs [and] the suppliers add a few thousand more, labour becomes a little tight and the cost advantage of that labour diminishes quickly.”

Hyundai, meantime, is not unfamiliar with building vehicles in Canada, though its first effort proved a costly, albeit short-lived, misstep.

In 1989, a few years after the company entered the North American market, Hyundai spent about US $400 million to build its first assembly plant in the region. It chose Bromont, Que., about 100 kilometres east of Montreal. But the site was plagued with problems from the outset. It was idled in 1993 and shuttered permanently two years later.