cars21.com: Can you briefly summarise the development of Green Cars at Hyundai-Kia Motor Company (HKMC) until today?
Ki-Sang Lee: HKMC has been developing technologies for HEV and EV since 90s. The first decade of this millennium we refer to as “preparing for mass production”. Since 2010, we have been expanding the line-up of HEVs but also preparing for mass production of a PHEV models. In 2011 we introduced the Sonata HEV to the US and Korean markets and since 2012 European customers have been able to buy the Kia Optima HEV. We are happy to say that the Sonata HEV placed first in 2012 Vehicle Satisfaction Awards. With regards to EVs, our 2010 model Blue-On and 2011 model Ray EV were initially produced on a small-scale, but we are now ready to move into the mass production of EVs. In addition to hybrids and EVs we have been working on Fuel Cell EVs (FCEVs). After the core technology development and performance improvement phases, 2012 saw the small-scale production of Tuson iX FCEV. In this pre-commercial production phase, we will produce approximately 1,000 FCEVs a year.
cars21.com: How many models of PHEVs and EVs you plan to introduce in next three years?
Ki-Sang Lee: In the next 3 years we have plan to introduce two plug-in hybrids and two electric vehicles. With regard to the two EV models, in 2014 we will introduce a small size CUV and in 2015 it will be a small size sedan. One is from Hyundai and one is from Kia and both will be mass-produced.
cars21.com: Which markets are you going to target with these two new EV models and what are your predictions or expectations?
Ki-Sang Lee: Our target will mainly be the American market. We are not sure about the sales target. As you know Nissan Leaf is kind of a pioneer on the electric vehicle market in the US. Its sales volume is up and down and up and down and overall sales are behind expectations, so we really have to be careful. We would like to sell 10,000 EVs in the American market the first year, and then if possible we will expand.
cars21.com: How is the present EV market in Korea?
Ki-Sang Lee: Last December we had presidential elections in Korea. The previous government was supportive of pure electric vehicles and its integration into Korean society; that was one of their major policies. This strategic government support for EV buyers was the reason we were able to introduce EVs to the Korean market. We are selling about 1000 EVs on the domestic market annually but it would not be possible without tax exemption or monetary incentives, as EVs are still much more expensive than commercial vehicles. Since the beginning of this year I’m not sure what will happen because of the different government and its different policy. The new government’s focus seems to be rather on the social welfare system. They did not clearly announce what will be their strategy on electric vehicles. So, future developments will depend mainly on policy.
cars21.com: Can you compare EV markets in Korea and Japan?
Ki-Sang Lee: In Korean society everybody understands why we need environmentally friendly vehicles but when it comes to actually purchasing a vehicle, buyers are not thinking deeply about the environment or global warming. If we can provide a very reasonable price to our customers, they would be willing to buy our electric vehicles. So far, the market is somewhat behind Japan and naturally our market is much smaller than the Japanese market.
cars21.com: How about the EV markets in Europe and the USA?
Ki-Sang Lee: In the European market there are very unique circumstances, for example, the popularity of diesel vehicles. Modern clean diesel vehicles have much better efficiency than conventional gasoline. They are nearly the same as gasoline hybrid vehicles. So in the European market, gasoline based hybrids will not be so popular.
Many European countries are rather focused on FCEVs. Among manufacturers, Mercedes Benz is in particular investing a lot of effort into the development of FCEVs. Actually, I didn’t know why Europe was so eager to have FCEVs until I heard about their plans to produce hydrogen using the excess energy generated from windmills. As you know, windmills have limited electric energy storage capacity. This solution allows the supply of hydrogen for fuel cells to be produced at a very cheap price and also without any harmful emissions.
The American market is different, it seems like they want to have all mobility solutions. They don’t have any unique trends or philosophy regarding these kinds of things. They need HEVs and also PHEVs and they also need EVs to meet their zero emission vehicle regulations. It is still not clear now to what extent the American market will be deploying EVs and FCEVs.
cars21.com: In your presentation, you mentioned the lack of standardisation as one of the export challenges. Do you see the light at the end of the tunnel? Will there be one standard for EV and PHEV charging?
Ki-Sang Lee: I don’t think so because of difference in infrastructure. Americans use 110 voltage systems, Europeans are using 220 voltage or AC, and so the whole electric infrastructure has been built on a different base. For us, the manufacturer, it would be acceptable to have three standards, one for the US, one for Europe and one for Asia. But as you know, the Chinese market is very big. Their philosophy is - why do we have to follow the other countries’ standards? If you want to sell your vehicle in China, then you have to meet our regulations.
cars21.com: You said that in the long term you cannot predict which technology will be adopted. What is your business strategy to address such uncertainty?
Ki-Sang Lee: Up to 2020 we see three vehicle categories likely coexisting. In the case of the electric vehicle there are difficulties related to infrastructure and also, once fully charged, the operating range is very limited. Thus, we think that the electric vehicle will be used primarily for city commutes or will be a second vehicle for the family – this would be a small class EV with driving range of up to around 200km.
FCEV have a very clear advantage, their driving range with full tank of hydrogen is up to 600km. On the other hand, there are limitations regarding hydrogen refilling stations, so I think FCEVs will be the choice for very long driving range vehicles, such as SUVs or busses. Even if we don’t have enough refilling hydrogen stations it will be ok because the range is enough to handle it.
Between these two categories, the city commuter and long driving range markets, the needs will be served by HEV and PHEVs.
What happens after 2020 is again hard to predict. It really depends on the evolution of the battery technology.
cars21.com: Which battery technology is the most promising? Do you see any technology breakthrough in the next 2-5 years?
Ki-Sang Lee: I don’t think so, I have discussed this several times with the battery specialists. Nowadays we see many promising news items about battery technology developments, increased energy density or improved durability but these are on a experimental level. If they are thinking about mass-production, they should have done all these kind of activities before today and within the next 4-5 years they would be ready for mass production. But it’s already 2013 and many special technologies they will still be developing up to 2018. We don’t have that much time to wait for a new generation of battery technology.
cars21.com: Thank you!