Hyundai to sell SUV EV in China with Chinese battery

South Korean auto producer Hyundai Motor has won approval to market a version of its Kona electric vehicle (EV) in China later this year, although it will have to be equipped with a Chinese battery to qualify for the country's generous subsidy programme.

The Angino will be the first sport utility vehicle (SUV) EV marketed by its Beijing Hyundai Motor (BHMC) unit. Along with two new plug-in electric hybrids, it will go on sale in this year's second half. BHMC, a joint venture with China's BAIC Motor, sold about 790,000 vehicles in China last year.

The Kona helped drive a 159pc increase from a year earlier in Hyundai's first-quarter EV sales to 21,148 units. Overseas sales more than tripled against the previous year.

South Korean EV battery producer LG Chem supplies power packs for the Kona elsewhere, but in China Hyundai will rely on domestic producer CATL. South Korean battery producers have been essentially shut out of China, the world's largest EV market, since 2016. Beijing is yet to allow any models equipped with their power packs to qualify for consumer purchase subsidies.

The subsidies, which are equivalent to 40pc of an EV's purchase price in some cases, mean auto producers are unable to compete without them. It has also allowed Chinese companies to emerge as the leading global EV battery producers.

China's increasingly stringent rules on environmentally friendly cars are compelling auto producers to sell more EVs and plug-in hybrids in the country.

China's government from this year requires auto producers to earn or buy new energy vehicle (NEV) credits equivalent to 10pc of their conventional car sales volumes in the country. A plug-in hybrid can be worth as many as two credits, while a long-range EV can earn up to six credits. That means that if a company sells 1mn conventionally fuelled vehicles across China in 2019, it will need 100,000 NEV credits. An auto producer with a typical mix of hybrid and EV sales would need to sell about 33,000 NEVs to meet the mandate or cover any shortfall by buying credits from other companies. The required NEV ratio rises to 12pc in 2020.

BHMC's NEV sales in 2018 totalled 4,000, meaning that BHMC earned credits equivalent to only about 1.5pc of its sales of fossil-fuelled vehicles.