The Korea Herald


Hyundai Mobis to supply battery systems to VW

Auto parts maker to build new production site in Spain

By Kan Hyeong-woo

Published : Aug. 9, 2023 - 16:14

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Logos of Hyundai Mobis (left) and Volkswagen Group (Provided by each company) Logos of Hyundai Mobis (left) and Volkswagen Group (Provided by each company)

Hyundai Mobis, an automotive parts maker under South Korean conglomerate Hyundai Motor Group, said Wednesday that it secured a large-scale order for battery system assembly from Volkswagen Group.

Although the exact terms of the contract were not disclosed, the Korean car parts maker said the order signifies Hyundai Mobis’ global competitive edge in technology and mass production of electric vehicle parts. The announcement marks Hyundai Mobis’ first overseas contract disclosed to the public.

“It’s the first time that we secured a large-scale order for automation parts with a major global (original equipment manufacturer),” said a Hyundai Mobis official.

Volkswagen Group was the second-largest automaker by sales last year with about 8.26 million units sold across the globe. Toyota took first place with almost 10.5 million units sold while Hyundai Motor Group came in at third place by selling approximately 6.85 million cars.

The battery system assembly, also known as BSA, is a product that combines a battery pack with the battery management system and other components to ensure the safe and efficient operation of the battery in an electric vehicle. The battery quality and performance of an EV heavily depend on battery systems.

Under the contract, Hyundai Mobis will supply BSAs to Volkswagen’s next-generation EV platform. According to Volkswagen, the automaker will invest approximately $131 billion in digitalization and electrification over the next five years to advance its market position. Volkswagen has also ramped up its eco-friendly sales target so that 80 percent of all passenger car sales in Europe are EVs by 2030.

The Korean auto parts maker said it plans to build a new production site in Spain at an unspecified site near Volkswagen’s automobile plant as it seeks to obtain approval from the board of directors before the end of this year. Volkswagen operates four factories in Spain.

Hyundai Mobis has BSA production lines in Korea, China and the Czech Republic. It is also currently constructing new BSA sites in Indonesia and the United States. Hyundai Motor Group invested $60 million in the Indonesian plant, which broke ground in June this year. Hyundai Mobis previously announced a plan to invest $1.3 billion through 2030 to build five automation parts factories in the states of Alabama and Georgia.

With the planned Spain site, Hyundai Mobis said the company will be able to establish a worldwide manufacturing chain for BSAs in major regions to cope with the increasing demand for EV production amid global automakers making goals of complete electrification.

The auto parts maker reported record-high quarterly sales with 15.7 trillion won ($11.9 billion), up 27 percent on-year, as it announced this year’s second-quarter earnings on July 27. The company’s operating profit of 663.8 billion won, a 65 percent jump on-year, surpassed FnGuide’s market consensus of 646 billion won.

Behind the upbeat figures, Hyundai Mobis pointed to strong demand for high-margin parts such as EVs and SUVs as well as the increased production of modules and key components amid an easing of the shortage of semiconductors.

The auto parts maker’s order log of core components such as automation parts for EVs and electronics has continuously grown in recent years. The company’s annual order logs were $1.76 billion in 2020, $2.52 billion in 2021 and $4.65 billion in 2022. The target for this year is over $5.3 billion.

Hyundai Mobis' global EV components production sites (Hyundai Mobis) Hyundai Mobis' global EV components production sites (Hyundai Mobis)