SEOUL (Reuters) – Hyundai Motor Co. plans to increase average annual investment in the electric sector by about two-thirds, spend $28 billion in the next decade and restructure its ailing China business as part of a strategy to boost electric vehicles. sales.

At its annual investor day on Tuesday, the South Korean automaker, which is the world’s third auto group by sales with subsidiary Kia (000270.KS), said it also raised its electric vehicle sales target to 2 million units by 2030 from 1.87. million. .

It will account for about a third of total auto sales, up from the 8% expected this year.

“With global demand for electric vehicles growing faster than market expectations, Hyundai Motor is raising its sales target for 2030,” it said in a statement.

To achieve the goal, Hyundai (005380.KS) plans to boost domestic production of electric vehicles in its three major markets — the United States, Europe and South Korea — as more countries offer incentives for locally manufactured vehicles.

In the United States, its largest market, electric vehicle production will account for three-quarters of all vehicle production there by 2030 from just 0.7% now.

Hyundai Motor CEO Jihoon Chang said the automaker will consider making its cars more compliant with the charging standard paid for by Tesla (TSLA.O) in North America.

While it raised sales targets for electric vehicles in its major markets, Hyundai said it would restructure its ailing China business to focus on profitability.

Zhang told investors that China, the world’s largest auto market, was very profitable until 2016 but has now become the biggest risk as the automaker has lost ground to local competitors.

Hyundai sold one factory in China in 2021 and plans to sell two more, including one that closed last year and one that it plans to close this year. The remaining two plants will be further rationalized and used for export to emerging markets.

Its product range in China will also be reduced to eight from 13, with a focus on high-end models and SUVs including the luxury brand Genesis.

To boost its competitiveness in batteries and the development of next-generation batteries, Hyundai plans to invest 9.5 trillion won ($7.4 billion) over the next 10 years.

Hyundai said it plans to introduce competitive lithium iron phosphate (LFP) batteries, a cheaper alternative to the lithium-ion batteries that have spurred electric vehicle adoption in China, for the first time around 2025.

Its biggest rival, Toyota (7203.T), also announced last week a plan to start using LFP batteries.

Hyundai aims to supply more than 70% of batteries through joint ventures by 2028 and beyond. Other plans include cooperation with specialized companies and start-ups, as well as establishing joint ventures with battery companies to ensure stable supply.

“It is also making joint research and equity investments in start-ups to accelerate the development of next-generation batteries,” the company said.

Hyundai said it aims to achieve an operating profit margin of 10% or higher in the electric vehicle business by 2030.

Its investment of 35.8 trillion won ($28 billion) in electricity is part of the 109.4 trillion won budget that Hyundai plans to spend through 2032.

($1 = 1,285.2400 won)

Reporting by Hyunsu Yim and Heekyong Yang; Written by Myung Kim. Editing: Ed Davies, Jacqueline Wong, and Conor Humphries

Our standards: Thomson Reuters Trust Principles.