Hyundai Mobis expects to improve profitability in its electrification division as it fully transfers its hydrogen vehicle-related operations to Hyundai Motor Company. Despite significant investments, its fuel cell business has not yielded clear results due to the slow growth of the hydrogen vehicle market.
According to industry sources on June. 3, Hyundai Motor has completed the purchase of the employees, assets, and domestic facilities of Hyundai Mobis’ hydrogen fuel cell business. To this end, Hyundai Motor and Hyundai Mobis inked an asset transfer agreement on Feb. 16., totaling 217.8 billion won (about $157.88 million). At the time, the South Korean auto conglomerate stated that their decision was to consolidate dispersed fuel cell business capabilities within the group while Hyundai Mobis focuses on the electrification market.
Hyundai Mobis has been manufacturing fuel cell power packs, which incorporate hydrogen fuel cell systems, hydrogen storage systems, and power conversion devices into one cohesive unit, as well as hydrogen fuel cell component stacks for hydrogen vehicles like the Hyundai Nexo. One of the main parts, making up roughly half the price of a hydrogen car, is the stack, which converts hydrogen into electric energy. Hyundai Mobis used to produce parts at its Chungju facility and deliver them to Hyundai Motor’s Ulsan and Jeonju facilities.
Some of Hyundai Mobis’ concerns about profitability should be alleviated partly with the transfer of the hydrogen car-related operations. Since hydrogen vehicles require more sophisticated technology than electric vehicles, their components have been more expensive. Additionally, there has been doubt regarding the hydrogen vehicle component industry from both inside and outside the company due to the absence of charging infrastructure, increased costs associated with charging, and uncertainty around the release of new fuel cell-powered cars.
Meanwhile, global sales of hydrogen vehicles were 2,382 during Q1 of this year (January-March), a decrease of 36.4% from the same period the previous year (3,743 units). Less than half of Nexo’s 2017 sales volume (11,079 units) were sold abroad; South Korea’s market share of hydrogen vehicles decreased from 54.8% to 34.7%.
The module and components segment of Hyundai Mobis reported an operating loss of roughly 15.55 billion won (about $112.8 million) in 2023, compared to an operating profit of 28.1 billion won ($20.38 million) the year before. The decline is attributed to hydrogen car parts. Although Hyundai Mobis does not publicly share its exact business revenues and losses, the stock market estimates that the division selling hydrogen vehicle parts lost between 50 billion won (about $36.26 million) and 100 billion won (about $72.52 million) annually.
