How EU’s shift on EVs gives Hyundai room to maneuver

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How EU’s shift on EVs gives Hyundai room to maneuver

Published: 31 Dec. 2025, 07:00

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

Hyundai Motor Group Executive Chair Euisun Chung, second from left, tours the company's manufacturing factory in the Czech Republic in October 2024. [HYUNDAI MOTOR]

[NEWS ANALYSIS]

Hyundai Motor and Kia stand to benefit handsomely in Europe, thanks to their core competency in hybrid powertrains, as the European Union (EU) rolls back its 2035 plan to end combustion-engine cars, with hybrids retaining enduring favor.

With a 15 percent tariff imposed by the Donald Trump administration likely to squeeze margins in the United States, the automaker is doubling down on Europe, a market it sees as critical.

The European Commission unveiled a proposal on Dec. 17 to soften its carbon-reduction targets for new vehicles, lowering the required cut from 100 percent to 90 percent by 2035. The revision reflects a growing recognition that phasing out internal-combustion vehicles — which still account for roughly 40 percent of new car sales in Europe — within a decade is unrealistic.

Where Hyundai held its ground: Hybrids

For Hyundai Motor, which has long pursued a dual-track strategy spanning both electric and hybrid vehicles, the easing of regulatory pressure in Europe could hardly be more welcome.

Hyundai's sales in Europe underscore the point, as hybrids are consistently outperforming pure EVs. In October, Hyundai sold 6,535 units of the Tucson in Europe, of which 4,699 were hybrids and 1,836 were plug-in hybrids. The Kona showed a similar pattern, with hybrid sales reaching 2,794 units, surpassing the 2,481 EV versions.

Of the 3,635 Kia Niro vehicles sold in the same period, 3,430 were hybrids, dwarfing just 205 EVs.

Hyundai had already been facing pressure due to a wave of low-cost Chinese cars flooding the region. This year, a total of 11.02 million passenger cars were sold in Europe through October — of these, Hyundai and Kia sold roughly 880,000 vehicles, securing only 8 percent market share. The sales were down 2.8 percent from last year’s sales, with the market share slipping 0.4 percentage points, according to the European Automobile Manufacturers’ Association.

“Recent renewed demand for hybrid vehicles reflects, in part, the decision by Europe and the United States to ease environmental regulations from their original trajectory,” said Kim Kyoung-you, a senior research fellow at the Korea Institute for Industrial Economics & Trade (KIET).

“Unlike Japan, which is closely associated with hybrids, or China, which has come to symbolize electric vehicles, Korea lacks a singular automotive identity,” Kim added. “But in today’s more fragmented and fluid market environment, that very absence may prove to be an advantage — allowing Korean automakers to compete on flexibility and balance.”

Hyundai said it plans to more than double its hybrid lineup, expanding from eight models today to at least 18 by 2030.

Hyundai Motor engineers manufacture cars at Hyundai Motor's manufacturing plant in the Czech Republic. [HYUNDAI MOTOR]

Second chance for Genesis

Hyundai may also see this as a golden chance for its Genesis luxury subbrand — which has long eyed Europe but repeatedly fallen short — in the absence of sufficient electric lineups.

Genesis recently announced that it will enter France, Spain, Italy and the Netherlands early next year, anchored by its first high-performance production model under the “Magma” banner. Until now, the brand has been sold only in Germany, Britain and Switzerland.

Despite being the historical heartland of premium automobiles, Genesis has been struggling to raise its presence. Genesis sold a cumulative 9,444 vehicles in Europe over the four years from 2021 to 2024, which means its sales totaled just 2,300 or so vehicles per year, or roughly 220 units per month.

Against Genesis’s global sales total of 229,532 units in 2024, Europe accounted for a mere 1.2 percent.

“Genesis is committed to establishing a strong regional center in Europe based out of Germany,” said Peter Kronschnabl, managing director of Genesis Motor Europe, during an interview with the Korean press when asked about the premium brand’s strategies for the European market.

“As previously announced, by 2027 we will introduce hybrid powertrains to our lineup — giving customers greater choice in an electrified future with Genesis,” he added.

Genesis' hybrid lineups are scheduled to roll out starting next year. It will begin with the GV80, whose hybrid production is expected to start in September next year, followed by the G80 hybrid in December 2026. The GV70 hybrid is slated for production in March 2027.

Kona hybrid SUV [HYUNDAI MOTOR]

An employee inspects the battery production process at LG Energy Solution’s plant in Holland, Michigan. [LG]

Battery makers feel the pinch

It's Korean battery manufacturers that will be harshly impacted by Europe’s abrupt and unexpected policy U-turn, triggering a cascade of contract cancellations from global clients.

LG Energy Solution alone has seen contracts worth some 13.6 trillion won ($9.6 billion) collapse this month, including the termination of a 4 trillion won deal with U.S.-based battery pack maker Freudenberg e-Power Systems and the cancellation of a $6.5 billion supply deal with Ford Motor.

The scale of the losses exceeds half of LG Energy Solution’s total revenue last year, which amounted to 25.62 trillion won.

Instead, Ford will license lower-cost lithium iron phosphate (LFP) battery technology from China’s CATL at the factory originally earmarked for the Korean supplier, as part of a broader overhaul of its EV strategy.

LG Energy's battery plant under construction in Ohio, in collaboration with Honda Motor, has also been abandoned.

Earlier in December, Ford also dissolved its joint venture with SK On, which initially promised to invest $11 billion to build three plants in Kentucky and Tennessee.

“The easing of European Union regulations on internal combustion engine sales — with the possibility of further relaxation — makes a downward revision of EV sales forecasts unavoidable,” said Choi Moon-sun, an analyst at Korea Investment Securities.

“Growth in demand for energy storage systems is also likely to slow, suggesting that the slump facing domestic battery makers could persist into 2026," Choi added. "In particular, market expectations that ESS demand would offset weakness in EVs are increasingly unlikely to be realized.”

The combined market share of Korea’s three largest battery manufacturers in the European EV battery market has already fallen to 35 percent through October this year, a decline of 10 percentage points from the end of 2024, according to SNE Research. During the same period, Chinese brands claimed 64 percent.

BY SARAH CHEA [[email protected]]