As the fifth largest automobile producer in the world, South Korea is exploring a unique path of industrial transformation with its profound accumulation in traditional manufacturing, electronic technology and information and communications fields. Hyundai Motor Group has proposed a “software-defined vehicle” strategy and plans to invest 23.5 trillion won in electrification and future mobility by 2025; Kia Motors, through the “Plan S” strategy, is committed to achieving annual electric vehicle sales of 1.2 million in 2026 vehicle target. Driven by the collaborative efforts of the government, enterprises and the industrial chain, South Korea’s automobile industry is completing a leapfrog development from traditional manufacturing to a new smart electric force. Based on on-site research and in-depth interviews, this article systematically analyzes the strategic layout, innovative practices and future prospects of the transformation of the Korean automobile industry for the first time, providing unique insights and practical inspiration for Chinese companies that want to go global and participate in the transformation of the global automobile industry.
Strategic Panorama of Korean Automotive Industry Transformation
Amid the century-old changes in the global automobile industry, the Korean automobile industry is undergoing profound strategic restructuring. As the fifth largest automobile producer in the world, South Korea’s automobile industry has an annual output of more than 3.5 million vehicles, accounting for 7.6% of the global market. However, facing the rise of new forces such as Tesla and the accelerated transformation of traditional European, American and Japanese car companies, the Korean automobile industry is at a critical turning point. Especially under the pressure of strong development of China’s new energy vehicle market, South Korea has to re-examine its positioning in the global automobile industry chain. Based on an in-depth study and judgment of industrial development trends, South Korea has chosen to shift its focus to high value-added market segments, especially to establish differentiated advantages in the fields of luxury electric vehicles and hydrogen energy commercial vehicles.
South Korea has shown unique forward-looking thinking when it comes to selecting technical routes. First of all, the Korean automobile industry has chosen a “two-wheel drive” technology development path – the parallel development of pure electric and hydrogen fuel cells. The E-GMP pure electric platform developed by Hyundai Motor Group adopts an 800V high-voltage architecture and its charging performance has reached the industry-leading level. At the same time, in the field of hydrogen energy, through the HTWO hydrogen energy brand layout, it has built a comprehensive platform from hydrogen fuel cell development to hydrogen production and storage. , a complete industrial chain for hydrogen transportation. Secondly, in the field of intelligence, South Korea has given full play to its advantages in semiconductors and information communications, focusing on the deployment of automotive-grade chips, intelligent driving systems and Internet of Vehicles technologies. It is worth noting that South Korea has adopted a more robust and progressive route when developing autonomous driving technology, giving priority to the commercialization of L3 autonomous driving in specific scenarios, which is highly consistent with its industrial foundation and market characteristics.
In terms of industrial upgrading, South Korea has established three key breakthroughs: first, the independent control of core components, focusing on improving the localization level of key components such as power batteries and motor electronic controls; second, digital transformation, promoting intelligent manufacturing and industrial Internet In-depth application in vehicle manufacturing; the third is the cultivation of new business formats, and active deployment of innovative models such as mobile travel services and car subscriptions. This multi-dimensional upgrade path not only ensures the stability of the industrial foundation, but also reserves sufficient innovation space for future development.
At the government level, South Korea has established a complete industrial support system. In 2021, the South Korean government released the “Future Automotive Industry Development Strategy 2030”, clearly proposing the goal of achieving commercialization of autonomous vehicles and leading the hydrogen energy vehicle industry by 2030. In terms of fiscal and tax support, it provides subsidies of up to 13 million won for the purchase of new energy vehicles and a 30% tax credit for relevant companies’ R&D investment. In terms of demonstration projects, the government has led the construction of a number of intelligent connected vehicle test sites, such as the K-City autonomous driving test site in Hwaseong, Gyeonggi Province, to provide experimental platforms for corporate technological innovation. More importantly, through the guidance of industrial policies, the Korean government has promoted the formation of a close innovation network among vehicle companies, parts suppliers and R&D institutions, and built a unique industrial ecosystem.
It is particularly worth mentioning that the Korean government has also established the “Future Automobile Development Committee”, chaired by the Minister of Industry and Industry, to coordinate the resources of various departments and ensure the effective implementation of industrial policies. By establishing a “Korean version of the New Deal Fund” with a scale of 100 trillion won, sufficient financial support will be provided for the transformation of the automobile industry. At the same time, in terms of talent training, South Korea has launched the “Future Automotive Talent Training Plan” and plans to train 10,000 professional talents by 2025 to provide intellectual support for industrial transformation.
This development model of government leadership, corporate entities, and industry collaboration not only maintains the traditional advantages of the Korean automobile industry, but also opens up a new path for future development. Through systematic strategic layout and policy support, South Korea is creating a more competitive and sustainable new ecosystem for the automotive industry. In this process, South Korea has demonstrated strong industrial organization capabilities and innovative vitality, providing a unique “Korean solution” for the transformation of the global automobile industry.
Complete strategic system for digital transformation
In the transformation process of South Korea’s automobile industry, digitalization has become the core driving force in reshaping industrial competitiveness. Based on the forward-looking judgment on the trend of industrial digitalization, South Korea has built a complete digital transformation system, from infrastructure to application scenarios to ecological construction, forming a systematic solution.
In terms of digital infrastructure construction, South Korea has adopted a comprehensive layout strategy. The first is the large-scale deployment of 5G private networks. Hyundai Motor built South Korea’s first automotive manufacturing 5G private network demonstration area at the Ulsan plant, meeting the low-latency, large-bandwidth, and high-reliability communication needs within the plant. Through the 5G private network, AGV cars, robots, testing equipment and other terminals in the factory can achieve millisecond-level responses, significantly improving production efficiency. Secondly, in terms of industrial Internet platform construction, the “H-CLOUD” platform independently developed by Hyundai Motor Group integrates core business systems such as manufacturing, supply chain management, R&D and design, and achieves end-to-end data connection and business collaboration. The platform currently has access to more than 2,000 suppliers, and the average daily data volume processed exceeds 100TB. In terms of data center layout, South Korea adopts a “centralized + distributed” architecture, setting up a central data center in Gyeonggi Province and deploying edge computing nodes in major production bases to build a multi-level data processing system.
Intelligent manufacturing upgrades are the top priority of the digital transformation of the Korean automobile industry. In terms of building a flexible production system, Hyundai Motor took the lead in achieving a breakthrough in “mixed line production” at its Asan plant. The same production line can produce fuel vehicles, hybrid vehicles and pure electric vehicles at the same time, and the product switching time is shortened from the traditional 4 hours to In 45 minutes, production efficiency increases by more than 30%. In terms of the application of digital twin technology, Kia Motors’ Guangming Factory has established a complete virtual factory model, covering all processes from stamping to final assembly, and realizing advanced applications such as production plan optimization, equipment predictive maintenance, and online quality monitoring. It is particularly worth mentioning that in terms of AI-enabled production, South Korea has developed a quality inspection system based on deep learning, which has achieved a 99.9% defect identification rate in key processes such as body welding and painting quality, greatly improving product quality. Consistency and reliability.
In terms of industrial Internet ecological construction, South Korea has demonstrated unique system integration capabilities. The first is the creation of a supply chain collaboration platform. The “supply chain visualization system” led by Hyundai Mobis realizes full tracking from raw material supply to finished product distribution. The system has access to more than 3,000 suppliers, covering more than 95% of the core parts. The system can monitor inventory levels in real time, predict changes in supply and demand, and optimize logistics routes, significantly improving the resilience and efficiency of the supply chain. In terms of innovation resource integration, South Korea has established the “Automotive Industry Innovation Alliance” to bring together vehicle companies, parts suppliers, scientific research institutions and innovation and entrepreneurial enterprises to create an open innovation ecosystem. By establishing unified data exchange standards and API interfaces, efficient docking and collaboration of innovative resources are achieved. In terms of data value mining, Korean automobile companies have developed advanced data analysis platforms to provide data support for corporate decision-making through in-depth analysis of multi-dimensional data such as manufacturing, supply chain, and marketing. For example, Hyundai Motor has optimized product design and after-sales service strategies and improved user satisfaction by analyzing the operating data of more than 10 million connected cars.
It is worth noting that South Korea’s digital transformation is not a simple technology application, but a deep integration of digital technology and industrial upgrading. By establishing unified data standards, complete security protection mechanisms, and clear value distribution rules, South Korea has successfully built an open, collaborative, and innovative digital industrial ecosystem. This systematic digital transformation plan not only improves industrial efficiency, but also lays a solid foundation for future development. At present, the digitalization level of South Korea’s automobile industry is in a leading position in the world, and its experience has important reference significance for other countries and regions.
Collaborative innovation mechanism for electrification transformation
The biggest feature of South Korea’s electrification transformation is its efficient collaborative innovation system, which has formed a unique development path through government guidance, enterprise leadership, and industrial chain collaboration. This collaborative mechanism not only accelerates the electric transformation process, but also cultivates globally competitive industrial clusters.
3.1 Government-enterprise collaborative promotion model
The Korean government has established a complete electrification support policy system. In terms of subsidies, the “differentiation + reduction” strategy is adopted to provide higher subsidies for high-performance electric models to guide companies to improve product technology. At the same time, a 30 billion won “Electric Vehicle Technology Innovation Fund” was established to focus on supporting the research and development of key technologies such as power batteries and electric drive systems. In terms of tax policy, it provides income tax exemptions of up to 40% for investment in electric vehicle-related research and development, and reduces various taxes and fees on the purchase of electric vehicles, effectively stimulating market demand.
In terms of demonstration projects, South Korea has launched the “Future Travel Demonstration City” plan, selecting cities such as Incheon and Sejong as pilot cities to carry out innovative applications such as electric vehicle sharing and smart charging. In particular, a “carbon neutral demonstration zone” will be built on Jeju Island, and it is planned to achieve 100% electrification of vehicles on the island by 2025 to accumulate experience for nationwide promotion. These demonstration projects not only verified the technical feasibility, but more importantly cultivated a complete industrial ecology.
In terms of standard system construction, South Korea has established an electric vehicle standardization committee to coordinate the formulation of technical standards such as charging interfaces, communication protocols, and safety requirements. It is worth noting that South Korea actively participates in the formulation of international standards and plays an important role in the ISO/IEC electric vehicle standard working group, enhancing its industrial voice.
3.2 Vertical integration of the industrial chain
In the field of upstream materials, South Korea has implemented a strategic layout. Companies such as LG Chem and SK Innovation have established global supply networks for key materials such as lithium, nickel and cobalt, locking in high-quality resources through equity investments, long-term agreements and other means. At the same time, Korean companies have achieved technological breakthroughs in the fields of cathode materials and separators. For example, the high-nickel ternary material (NCM9½½) innovatively developed by SK has an energy density of more than 300Wh/kg, which is at the global leading level.
The battery industry cluster is the core support for South Korea’s electrification transformation. The power battery industrial park centered on Chungcheongnam-do brings together leading companies such as LG New Energy and Samsung SDI, forming a complete industrial chain from materials, cells to modules. Especially in cutting-edge technology fields such as solid-state batteries, South Korea has accelerated technological breakthroughs through collaborative innovation among industry, academia and research institutes. It is expected that by 2025, South Korea’s power battery production capacity will reach 400GWh, accounting for 23% of the global share.
In terms of parts and components supporting system, South Korea has established a multi-level supplier network. First-tier suppliers such as Hyundai Mobis and Mando have increased investment in electrification transformation and formed independent capabilities in areas such as motors and electronic controls. At the same time, through the “Components Localization Plan”, a number of specialized and new enterprises have been cultivated, such as creating competitive advantages in power semiconductors, high-voltage connectors and other subdivisions.
3.3 Infrastructure collaborative construction
South Korea adopts a “government-guided, market-led” model to promote the construction of charging infrastructure. At the planning level, a regional and phased charging network layout plan has been formulated, focusing on solving the needs of residential areas, highways and other scenarios. Innovatively launched the “Charging Station Cooperation Construction Plan” to attract social capital participation through government subsidies, franchise rights, etc. As of 2024, the number of public charging piles in South Korea will exceed 150,000, and fast charging will account for 40%.
In terms of battery replacement model innovation, South Korea has carried out targeted exploration. Hyundai Motor and SK Telecom are cooperating to build a network of battery swap stations, mainly for the commercial vehicle market, especially urban logistics and distribution scenarios. Through standardized battery pack design and intelligent operation system, battery replacement can be completed within 15 minutes, significantly improving vehicle operation efficiency.
Coordinated power grid upgrade is key to ensuring the sustainable development of electrification. Korea Electric Power Company (KEPCO) implemented the “Smart Grid Upgrade Plan” and invested more than 5 trillion won in power grid transformation. It has innovatively developed the “V2G Demonstration Project”, built two-way charging stations in Seoul and other places, and explored business models for electric vehicles to participate in power grid peak regulation. At the same time, intelligent charging management systems are promoted to guide off-peak charging through price signals to improve grid operation efficiency.
Through this multi-level collaborative mechanism, South Korea has successfully built a complete electric vehicle industry system. In particular, it has formed global competitive advantages in key areas such as power batteries and charging facilities, laying a solid foundation for the sustainable development of the industry. The successful practice of this collaborative innovation model provides useful reference for other countries to promote electrification transformation.
Hyundai Motor Group’s innovative practices (exclusive case analysis)
Hyundai Motor Group is undergoing the largest strategic transformation in history, evolving from a traditional automaker to a smart mobility solutions provider. Through systematic innovative layout and business model reconstruction, Hyundai Motor is redefining future travel, and its innovative practices provide an important reference for the transformation of the global automotive industry.
In the field of robot business, Hyundai Motor quickly entered the high-end robot market by acquiring Boston Dynamics and investing US$8 billion. At present, three major product lines have been formed: industrial robots, service robots and wearable robots. Among them, the most eye-catching is that the “DAL-e” intelligent service robot has been put into use in 100 Hyundai car showrooms in South Korea. It is equipped with natural language processing and facial recognition technology and can provide customers with personalized consulting services. In terms of industrial applications, Hyundai Robotics has deployed more than 500 collaborative robots in the Ulsan factory to achieve human-machine collaboration in welding, logistics and other links, increasing production efficiency by 35%.
Urban Air Mobility (UAM) is an important direction for Hyundai Motor to lay out future travel. Its independently developed S-A1 electric vertical take-off and landing aircraft (eVTOL) has completed prototype testing and plans to be put into commercial use in 2025. This model uses a distributed electric propulsion system, with a cruising speed of up to 290 kilometers per hour and a cruising range of 100 kilometers. Hyundai has also reached a strategic cooperation with Uber Airlines and plans to provide air taxi services in major cities in the United States.
In terms of hydrogen energy ecological construction, Hyundai has integrated its hydrogen energy business through the HTWO brand and invested more than US$6.5 billion in building hydrogen fuel cell production capacity. The third-generation fuel cell system developed by it increases the power density by 50% and reduces the cost by 50%, and has been applied to NEXO and other models. At the same time, Hyundai participated in the construction of South Korea’s hydrogen energy demonstration city and built a green hydrogen plant with an annual production capacity of 13,000 tons in Ulsan to create a complete industrial chain from hydrogen production to application.
Hyundai Motor has established a global network of innovation centers. In addition to the innovation center at its headquarters in Seoul, it has branches in Silicon Valley, Tel Aviv, Berlin and Singapore. Among them, the Silicon Valley Innovation Center focuses on autonomous driving and artificial intelligence research and development, and has established a joint laboratory with Stanford University; the Tel Aviv center focuses on network security and sensor technology; and the Berlin center focuses on hydrogen energy and battery technology research and development. This distributed innovation network enables Hyundai to quickly capture the global technological frontier.
In terms of technology incubation mechanism, Hyundai has innovated the “open innovation” model. Through the establishment of the modern CRADLE fund with a scale of US$1 billion, we will invest in high-quality innovative projects around the world. Especially in the field of software-defined automobiles, it has invested in more than 20 technology startups to build a complete innovation ecosystem. At the same time, the “ZER01NE” innovation accelerator project has been established to select 50 innovative projects for incubation every year and provide financial support and technical guidance.
In terms of talent attraction, Hyundai implements the “Global Talent Plan” to attract the world’s top talents through differentiated salary systems and career development channels. Especially in emerging fields such as software and artificial intelligence, competitive option incentives are provided. As of 2024, Hyundai has more than 12,000 software engineers worldwide, 40% of which are from overseas.
In the field of mobile travel services, Hyundai provides one-stop travel solutions through the Mocean brand. In the Korean market, its shared car business has a market share of 45%. It optimizes vehicle launch and pricing strategies through big data analysis, and its operating efficiency has been significantly improved. Especially in the field of electric vehicle sharing, Hyundai has developed an intelligent dispatching system to realize automated management of charging and maintenance.
The subscription model is an important innovative direction for modern exploration. The “Hyundai Selection” subscription service it launched allows users to flexibly switch between different models and includes a package of services such as insurance and maintenance. Innovatively introducing a “points system”, users can accumulate points through daily use of cars and redeem them for value-added services. This model not only improves customer stickiness, but also brings stable cash flow to Hyundai.
In terms of realizing ecological value, Hyundai has developed a blockchain-based “Digital Vehicle Passport” system to record vehicle life cycle data and provide credible data support for second-hand car transactions and insurance pricing. At the same time, the user data collected through the Internet of Vehicles platform can provide data services to insurance, maintenance and other partners with the user’s authorization, forming a new source of income.
Modern innovation practices are not scattered technological experiments, but based on clear strategic positioning and building future competitive advantages through systematic layout. Especially in the era of software-defined cars, Hyundai is reshaping its position in the global automotive industry through the deep integration of technological innovation and business model innovation. This comprehensive innovation and transformation practice provides important inspiration for traditional car companies to cope with industrial changes.
Kia Motors’ Transformation Breakthrough
As an important member of Hyundai Motor Group, Kia Motors has achieved significant transformation breakthroughs through the Plan S strategy. Based on the latest front-line survey data, we can conduct an in-depth analysis of Kia’s innovative practices and actual effects in terms of products, technology, and market.
5.1 Latest progress of Plan S strategy
In terms of product matrix optimization, Kia adopts a “dual-track parallel” strategy to simultaneously promote electrification and fuel vehicle upgrades. As of the third quarter of 2024, the layout of 11 pure electric models has been completed, covering the A0 to C-class mainstream market. Among them, EV6 built based on the E-GMP platform has become the benchmark in the market segment with global sales of 285,000. It is worth noting that Kia has innovatively launched an “electric first” development model. The new platform design prioritizes electrification needs and then adapts fuel power, which significantly improves platform efficiency.
Technology platform upgrade is the core support for transformation. Kia invested US$15 billion to upgrade the E-GMP 2.0 platform, integrating 800V high-voltage architecture and new generation battery technology to achieve 350kW fast charging capability and a 10-minute charging range of 230 kilometers. In terms of power system, the independently developed third-generation permanent magnet synchronous motor has an energy conversion efficiency of 94%, which is at the leading level in the industry. At the same time, it integrates the Vehicle Platform 3.0 software architecture to support OTA upgrades and on-demand function activation.
In terms of market strategy adjustment, Kia implements differentiated positioning. In the European market, to strengthen its image as a design pioneer, EV9 won the 2024 Red Dot Design Award through its unique geometric aesthetic design. In the North American market, in response to consumers’ concerns about cruising range, a long-range version is launched, equipped with a 118kWh large-capacity battery pack, with a WLTP range of 700 kilometers. In the Asia-Pacific market, through localized R&D, we develop battery thermal management systems adapted to tropical climates.
5.2 Implementation status of innovative projects
The PBV (Purpose Built Vehicle) business is an important breakthrough for Kia’s differentiated competition. Based on the modular platform, 12 special models including urban logistics, mobile office, and medical services have been developed. Among them, Ray Van has a market share of 45% in South Korea’s last-mile delivery, and its operating costs are 35% lower than traditional logistics vehicles. Especially in the field of cold chain logistics, the developed intelligent temperature control system can achieve precise temperature control in different regions and has been widely recognized by the market.
In terms of intelligent layout, Kia has built an end-to-end intelligent ecosystem through the “Connected Car 2.0” plan. At the vehicle system level, it uses Qualcomm Snapdragon 8295 processor to support new generation human-computer interaction such as AR-HUD. Through cooperation with Korea Telecom, it is the first to deploy a 5G-V2X system in Seoul to achieve real-time communication between vehicles and infrastructure. Data shows that the accident rate of models equipped with this system dropped by 23%.
The exploration of service transformation has achieved remarkable results. Kia launched the “Kia Connect+” membership service, which integrates full life cycle services such as charging, insurance, and maintenance. Innovatively introducing a “carbon points” mechanism, users can earn points through low-carbon travel and redeem them for value-added services. As of the second quarter of 2024, the number of members has exceeded 1.5 million, and the renewal rate has reached 85%, significantly improving user stickiness.
5.3 Quantitative analysis of effects
Market performance data confirms the effectiveness of the transformation. In the first three quarters of 2024, Kia’s global electric vehicle sales reached 458,000 units, a year-on-year increase of 68%, of which the proportion of high-end models (priced above US$40,000) increased to 35%. In the European market, the market share of electric models reached 9.2%, ranking third. Financial data shows that the gross profit margin of the electric vehicle business reached 18.5%, an increase of 3.2 percentage points from 2023.
Analysis of user feedback shows significant improvements in brand awareness. According to the latest JD Power survey, Kia’s electric vehicle user satisfaction ranks second among mainstream brands, especially in the two dimensions of charging convenience and smart interconnection experience. Survey data shows that 78% of users recognize Kia’s innovative design language, and 85% of users said they would recommend it to relatives and friends. The word-of-mouth effect is obvious.
In terms of brand value, according to Interbrand data, Kia’s brand value has reached US$17.1 billion, an increase of 23% from 2023, and its growth rate ranks among the top global automobile brands. Especially among Generation Z users, Kia’s brand favorability has increased significantly and it is considered one of the three most innovative car brands.
Kia’s transformation practice shows that traditional car companies can find differentiated competitive advantages in the new energy era through clear strategic positioning and systematic changes. Especially in the collaborative promotion of product innovation and service innovation, Kia has provided a successful example that can be used as a reference. Judging from the latest operating data, Kia’s transformation has entered a virtuous cycle, laying a solid foundation for future sustainable development.
Industrial chain collaborative innovation ecology
By building an open and collaborative innovation ecosystem, Hyundai Motor Group has achieved collaborative upgrading of all links in the industrial chain. The construction of this innovative ecosystem not only improves the competitiveness of the overall supply chain, but also provides strong driving force for industrial transformation.
6.1 Core supplier transformation cases
As the group’s largest parts supplier, Hyundai Mobis has taken the lead in realizing strategic transformation. It invested US$12.5 billion to build a next-generation automotive electronics research and development center, focusing on the three major areas of smart cockpit, autonomous driving and electrification. In terms of smart cockpits, the AR-HUD system developed has received orders from many OEMs such as BMW and Mercedes-Benz. Especially in the field of automotive-grade chips, the domain controller solution developed in cooperation with NVIDIA has industry-leading integration and performance. Data for the second quarter of 2024 show that its automotive electronics business revenue accounted for more than 50% for the first time, marking a substantial breakthrough in transformation.
Hyundai Wia quickly entered the field of electric drive systems based on traditional powertrains. By acquiring the motor technology of the German SHL company, we independently developed the third-generation integrated electric drive system. Compared with the traditional three-in-one solution, the weight is reduced by 25% and the cost is reduced by 30%. At the same time, continued efforts have been made in Industry 4.0, with Ulsan Smart Factory achieving an automation rate of 85% and product yield rate increasing to 99.98%. It is particularly worth mentioning that the modular production system it developed can support the production of traditional power and electric systems at the same time, significantly improving the efficiency of production capacity utilization.
Hyundai Kefik has found a unique position during the transformation process. Focusing on lightweight solutions for new energy vehicles, it has developed an innovative carbon fiber reinforced composite body structure, achieving a weight reduction of more than 15% for the entire vehicle. Through cooperation with the Korea Institute of Science and Technology, the technical bottleneck of mass production of carbon fiber materials has been broken through, and production costs have been reduced by 40%. Currently, this technology has been applied on a large scale in modern high-end electric vehicles.
6.2 Innovative resource integration mechanism
Industry-university-research collaboration is an important pillar of Hyundai Motor Group’s innovation system. Through the “Future Automobile Innovation Alliance”, we have integrated the resources of 20 top universities including Seoul National University and the Korea Academy of Science and Technology, and established 16 joint laboratories. Especially in the field of solid-state batteries, we collaborated with Seoul National University to achieve breakthroughs in key material technologies, increasing energy density by 50% and entering the pilot stage. At the same time, through the “Industrial Doctoral” project, 100 engineers are selected to study in cooperative universities every year, establishing a new model for cultivating industry-university talents.
The entrepreneurial incubation system has built a complete innovation value chain. Through the “H-START UP” plan, we provide comprehensive support for automotive technology entrepreneurial projects. The incubator has three stages: pre-incubation, acceleration and industrialization, with supporting financial support ranging from US$100,000 to US$5 million. Data shows that as of 2024, 185 projects have been successfully incubated, 35 of which have been commercialized, and the average valuation has increased by 8.5 times. Especially in the field of intelligent networking, incubated entrepreneurial projects account for 70% of the Korean market.
The venture capital layout adopts the “1+N” model. In addition to the modern innovation fund with a scale of US$1.5 billion, it has also established multiple cooperative funds with the world’s top venture capital institutions. Innovatively adopting the “investment + industry empowerment” model, in addition to financial support, it also provides testing and verification, channel sharing and other resources to investing companies. Especially in Israel, through cooperation with local venture capital funds, it has invested in more than 50 automotive technology projects, forming an effective mechanism for rapid identification and industrialization of innovative technologies.
6.3 New model of international cooperation
The construction of technology alliance embodies the concept of open innovation. Hyundai took the lead in establishing the “Hydrogen Energy Commercial Vehicle Alliance” to integrate the resources of seven vehicle companies including Daimler and Volvo to jointly promote the standardization of hydrogen fuel cells. Through the patent pool mechanism, the technology access threshold for member companies is lowered and the industrialization process is accelerated. As of 2024, the alliance has formed 158 technical standards, covering the entire hydrogen energy vehicle industry chain.
In terms of resource complementarity, the “capability exchange” model is adopted. Established strategic cooperation with Intel to exchange autonomous driving test data for chip customization development support. In-depth cooperation with LG Chem in the battery field has significantly improved the stability of the supply chain through a capacity sharing mechanism. Especially during the chip shortage, this cooperation model ensures the relative stability of Hyundai Motor Group’s supply chain.
Market collaboration creates a win-win model for all parties. In the Southeast Asian market, we have in-depth cooperation with Grab in Singapore to integrate shared travel with car sales and develop customized models suitable for the local market. In India, we cooperate with local technology companies to develop lightweight operating systems to reduce the cost of smart vehicles and enhance market competitiveness. This “technology localization” strategy allows Hyundai Motor to quickly establish competitive advantages in emerging markets.
Hyundai Motor Group’s industrial chain collaborative innovation practice shows that in the period of transformation of the automobile industry, it is crucial to build an open and collaborative innovation ecosystem. In particular, the systematic layout in terms of core supplier transformation, innovation resource integration and international cooperation not only improves the overall innovation efficiency, but also provides strong support for future sustainable development. This experience in building an innovative ecosystem has important reference value for the transformation of the global automotive industry.
New picture of globalization strategy
In a critical period of reshaping the global automotive industry landscape, Hyundai Motor Group has built a global competitive advantage in the new era through precise market layout, supply chain restructuring and in-depth localized operations. Based on the latest global strategic practice, we can conduct an in-depth analysis of its innovative measures and actual results.
7.1 Precise layout of regional markets
The European market strategy focuses on electrification transformation. Hyundai Motor Group has invested 8.5 billion euros to build an electric vehicle production base in Hungary, with an annual production capacity of 150,000 units, focusing on the mid-to-high-end market. Through differentiated positioning, the IONIQ series has a market share of 12.3% in the European high-end electric vehicle market, second only to Tesla. Especially in the Nordic market, by cooperating with local charging operators to build a “Polar Testing and Certification Center” and developing battery technology suitable for extremely cold environments, it has been highly recognized by consumers. In the first half of 2024, electric vehicle sales in Norway and other Nordic countries increased by 85% year-on-year.
The North American market breakthrough adopts a “two-wheel drive” strategy. On the one hand, through the intelligent transformation of the Alabama factory, high-end brands such as Genesis are produced locally, reducing costs by 30%. On the other hand, it cooperates with American start-ups to develop large electric SUVs and pickup trucks adapted to American life, and enters high-profit market segments. It is worth noting that the subscription-based car service “Evolve+” launched by Hyundai in the United States has average monthly active users of more than 100,000, becoming an important starting point for the brand’s rejuvenation.
The development of emerging markets shows strong adaptability. In India, US$1.2 billion was invested to upgrade the Chennai R&D center to become a global small electric vehicle development base. Innovatively launches the “shared ownership” model, which enables multiple people to jointly own a car through blockchain technology, significantly lowering the threshold for users to purchase a car. In Southeast Asia, through cooperation with Indonesian state-owned enterprises to build battery factories, it has a say in the regional supply chain. As of the third quarter of 2024, the growth rate of electric vehicle sales in emerging markets will reach 125%.
7.2 Reconstruction of global supply chain
The optimization of the production base highlights the concept of “regional independence”. Through the “Urban Factory” plan, 7 smart micro-factories will be built around the world. The investment in a single factory will not exceed US$300 million, but it has strong flexible production capabilities and can quickly respond to regional market needs. Especially in the new factory in the Czech Republic, it adopts the “warehousing-free production” model and realizes instant delivery of parts through an intelligent logistics system, increasing the inventory turnover rate by 60%.
The adjustment of procurement strategy reflects “diversified” thinking. Establish a “3+3” supplier system, that is, each core component has at least three global suppliers and three regional suppliers to effectively prevent supply chain risks. Innovatively launched the “Supplier Technology Innovation Fund” to support the transformation and upgrading of core suppliers. As of 2024, US$2.5 billion has been invested to support 150 suppliers to complete technology upgrades and build a stable supply ecosystem.
The risk management system has been comprehensively upgraded. Build a “supply chain visualization platform” through blockchain technology to monitor the production status of more than 4,000 suppliers around the world in real time. Establish a “crisis early warning mechanism” to deploy response plans in advance based on multi-dimensional data such as politics, economy, and natural disasters. During the chip shortage crisis, this system helped Hyundai control production shutdown losses below 60% of the industry average.
7.3 Localized operation innovation
R&D localization reflects the concept of deep integration. Five major R&D centers have been established around the world, each with a clear positioning in its technical field. For example, the German R&D center focuses on hydrogen fuel cell technology, while the Chinese R&D center focuses on intelligent networking. Especially in terms of software development, using the “distributed innovation” model, each regional center can develop and verify independently, significantly improving research and development efficiency. In 2024, the proportion of localized R&D projects will reach 65%, and the number of patent applications will increase by 45% year-on-year.
Service localization highlights scene innovation. Develop differentiated service models based on different market characteristics. For example, a “shared repair station” was launched in Japan and it cooperated with local repair shops to establish a community service network, reducing repair costs by 40%. In Brazil, it provides on-site maintenance to users in remote areas through a mobile service fleet, increasing service coverage by 35%. Innovatively launched the “Cultural Consultant” project and hired local experts to participate in service process design to improve service experience.
Brand localization focuses on cultural resonance. Through the “Design DNA” project, local cultural elements are integrated into product design. For example, in the Middle East market, we develop a vehicle-mounted system adapted to Islamic culture and integrate functions such as prayer reminders and orientation guidance. In the Latin American market, limited edition models collaborated with local artists were launched to strengthen the emotional connection with the brand. Data shows that after the implementation of brand localization actions, brand favorability increased by an average of 28 percentage points.
Hyundai Motor Group’s global strategy practice shows that in the era of Globalization 3.0, companies must establish more flexible and in-depth localization capabilities. In particular, innovative practices in regional market layout, supply chain restructuring, and localized operations not only enhance global competitiveness, but also provide valuable experience for the transformation and upgrading of multinational enterprises. Judging from the latest operating data, this new globalization strategy has shown significant results and laid a solid foundation for the group’s future sustainable development.
Strategic opportunities for Chinese enterprises
As an important participant in the transformation and upgrading of the automotive industry, Chinese companies are facing historic opportunities for in-depth cooperation with leading global companies. Based on an in-depth analysis of industry development trends and corporate capabilities, the following professional suggestions are made regarding strategic opportunities for Chinese companies.
8.1 Identification of cooperation areas
Technical cooperation opportunities are mainly concentrated in three directions. The first is the core technology field of new energy vehicles, especially in battery management systems (BMS), high-power fast charging technology, etc. Chinese companies have strong capabilities. It is recommended to work with international car companies through joint development to break through cutting-edge technologies such as 800V fast charging. Secondly, in the field of intelligent connectivity, China has first-mover advantages in 5G-V2X, high-precision maps, etc., and can jointly build technical standards with global car companies. The third is the field of intelligent manufacturing. The innovative practices of Chinese companies in flexible production and intelligent logistics can provide solutions for the upgrading of the global supply chain.
Market collaboration space is reflected on multiple levels. In terms of channel construction, Chinese companies can quickly build overseas sales networks by cooperating with international car companies. Especially in emerging markets such as Southeast Asia and the Middle East, market development costs can be reduced by co-building marketing systems and sharing after-sales networks. In terms of product positioning, it can carry out differentiated competition and cooperation with international brands, such as forming complementarities in market segments such as A0-class electric vehicles. Data shows that through the collaborative cooperation model, the overseas market share of Chinese automobile companies will increase by 2.8 percentage points in 2024.
The direction of complementary resources needs to be accurately grasped. The industrial chain advantages of Chinese companies in areas such as power batteries and electronic control systems can complement the brand influence and R&D systems of international car companies. It is recommended to realize the integration of advantageous resources through the establishment of joint ventures and technical alliances. Especially in terms of raw material supply, Chinese companies can leverage the advantages of their local supply chain to provide stable and reliable parts supply to global partners.
8.2 Entry strategy design
Business model selection requires innovative thinking. It is recommended to adopt a “modular cooperation” strategy to divide the cooperation content into different modules and allow partners to selectively participate according to their respective needs. For example, technology development, manufacturing, marketing and other links can be modularized to form differentiated cooperation plans through flexible combinations. Especially in the field of new energy vehicles, we can innovate the “technology for market” model and exchange core technical capabilities for market access opportunities.
Innovation in cooperation methods requires breaking through traditional thinking. In addition to traditional technology licensing and joint ventures to build factories, the “innovation consortium” model can be explored. By forming a transnational innovation alliance, we will jointly develop next-generation automotive technologies. It is recommended to establish a joint innovation fund to provide continuous financial support for cooperative projects. In terms of intellectual property management, the “patent pool” mechanism is adopted to achieve technology sharing and interest balance.
Risk control measures must be comprehensive and systematic. It is recommended to build a “3D risk management system”, that is, to conduct all-round risk control in the depth, breadth and time dimensions. In terms of technical cooperation, core technology risks are controlled through step-by-step delivery and phased verification. At the market cooperation level, establish a flexible exit mechanism and reserve space for strategic adjustment. Special attention should be paid to the protection of intellectual property rights. It is recommended to set up a dedicated intellectual property management team and formulate detailed protection plans.
8.3 Implement path planning
Short-term action recommendations focus on “quick-win” projects. First of all, it is recommended to take the lead in cooperation in areas with existing technological advantages, such as power batteries, vehicle operating systems, etc. Secondly, select 1-2 key markets to carry out pilot cooperation and accumulate experience. Third, test the feasibility of the cooperation model through small-scale technology licensing or joint development projects. It is recommended that the first batch of demonstration projects be completed within 6-12 months.
The medium-term layout direction emphasizes capacity building. In the next 2-3 years, we will focus on promoting work in three aspects: first, establishing a joint R&D center to strengthen technological innovation capabilities; second, optimizing the supply chain system and improving global collaboration efficiency; third, cultivating an international talent team to reserve manpower for in-depth cooperation. resource. In particular, we must focus on the accumulation and breakthrough of core technologies to ensure that we maintain relative initiative in cooperation.
The long-term development strategy focuses on global layout. Planning for more than five years should focus on the goal of building a world-class automobile company. It is recommended to gradually build a global business network through strategic investments, mergers, acquisitions and reorganizations. In terms of technology research and development, it is necessary to proactively deploy future technologies such as hydrogen energy and solid-state batteries to ensure long-term competitiveness. At the same time, we must continue to deepen international cooperation and promote the formation of a more open and inclusive industrial ecosystem.
After years of development, Chinese automobile companies have developed the basic conditions for in-depth cooperation with leading global companies. The key is to seize the opportunity and choose the right entry point and implementation path for cooperation. It is recommended that business leaders should have both strategic determination and tactical flexibility when promoting international cooperation, and ultimately achieve a mutually beneficial and win-win situation through systematic planning and steady implementation. It needs to be particularly emphasized that international cooperation is a gradual process, and enterprises must have enough patience and determination to continuously improve their capabilities during cooperation and achieve sustainable development.
Development prospects in the next five years
Standing at the time node of 2024, looking back at the dramatic changes in the automotive industry over the past five years, we can clearly foresee the key trends and strategic directions for industry development in the next five years. Based on in-depth observation of the global market and systematic research and judgment of cutting-edge technologies, the following in-depth analysis of the future development of the industry is now proposed.
In terms of technology evolution path, the integration of electrification, intelligence and connectivity will enter a new stage. It is expected that by 2029, solid-state batteries are expected to achieve commercial breakthroughs, with energy density increasing to more than 400Wh/kg and charging time shortened to less than 10 minutes. It is worth noting that sodium-ion battery technology will be widely used in economical models and is expected to occupy 35% of the entry-level electric vehicle market. In the field of intelligent driving, L4 autonomous driving will realize commercial operations in specific scenarios, especially in environments such as closed parks and ports and terminals. The computing power of automotive-grade AI chips will exceed 2,000 TOPS, supporting more complex autonomous driving algorithms. In addition, the pre-commercial use of 6G technology will bring a qualitative leap to the Internet of Vehicles, and the data transmission delay between vehicles is expected to be reduced to less than 1ms.
The changes in the industrial structure will take on new characteristics. The boundaries between traditional car companies and technology companies will be further blurred, and it is expected that there will be 3-5 global-level “technology car companies”, which will have strong software and hardware R&D capabilities. The supply chain system will form the characteristics of “regional clusters”, and the three major regions of North America, Europe, and Asia-Pacific will each build relatively independent supply ecosystems. What deserves special attention is that with the rise of emerging markets such as India and Southeast Asia, the center of gravity of the global automobile industry will shift eastward. Chinese companies are expected to account for more than 45% of global shipments in the field of new energy vehicles and play a more important role in the supply chain of key components.
New opportunities and new challenges coexist. First of all, intelligent transformation will bring about a huge incremental market. It is expected that the market size of in-vehicle software and digital services will reach US$350 billion by 2029. New business models such as personalized customization and in-vehicle app stores will create significant value. Secondly, the energy revolution will accelerate, and the penetration rate of hydrogen energy vehicles in the commercial vehicle field is expected to reach 15%, especially in the field of heavy trucks and long-distance buses. However, challenges cannot be ignored. Geopolitical risks in the chip supply chain may intensify, and fluctuations in raw material prices will affect corporate profitability. At the same time, the decline of subsidy policies in various countries will test the car-making strength and cost control capabilities of enterprises. What needs to be especially vigilant is that network security threats will increase as the level of automobile intelligence increases, and it is expected that average annual related expenditures will increase by more than 30%.
Based on the above analysis, the following strategic suggestions are put forward for industry participants: First, maintain the continuity and forward-lookingness of technology investment. It is recommended to use 8-12% of revenue for research and development, focusing on algorithms, software and other directions. Second, build an open and collaborative innovation ecosystem and integrate innovation resources through industrial funds, technology alliances, etc. Third, implement differentiated market strategies, strengthen brand and service advantages in mature markets, and highlight cost-effectiveness and localization features in emerging markets. Fourth, establish an agile organizational system, cultivate cross-border integration talents, and improve the ability to respond quickly to market changes.
It is particularly important to emphasize that the next five years will be a critical period for the reshaping of the automotive industry structure, and companies need to maintain strategic focus while cultivating new competitive advantages. It is recommended to build sustainable competition barriers through the combination strategy of “technology + service + ecology”. In terms of technology, we must advance the layout of cutting-edge areas to ensure that we do not fall behind on key tracks; in terms of services, we must deepen user insights and create differentiated brand experiences; in terms of ecological construction, we must proactively embrace open cooperation and form healthy innovations ecosphere.
Looking forward to 2029, the automotive industry will usher in more exciting changes and opportunities. Successful companies will be those organizations that can accurately grasp the pulse of the industry, continue to innovate and enterprising, and have a global perspective. Chinese enterprises have unique advantages in this round of industrial transformation. The key is to seize opportunities, meet challenges, and win greater development space in the global competitive landscape.
