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Stiff competition pressures Hyundai to maintain edge in fuel-cell cars

All Headlines 10:54 November 24, 2014

SEOUL, Nov. 24 (Yonhap) -- Hyundai Motor Co., one of the leading pioneers in fuel-cell cars, is coming under pressure to maintain its edge as rivals start launching new hydrogen vehicles, industry sources said Monday.

South Korea's largest carmaker claims to be the first company in the world to begin mass production of a fuel-cell electric vehicle (FCEV), with the Tucson in Feb. 2013. The compact zero-emission SUV helped Hyundai be tapped by the European Commission as the pilot company for an initiative to promote fuel-cell cars, and see the carmaker supply public agencies in Sweden and Denmark.

Starting this year, it has started leasing the Tucson FCEV in selected areas of the United States. The three-year, US$499 per month lease covers all fuel recharging costs and maintenance.

Stiff competition pressures Hyundai to maintain edge in fuel-cell cars - 2

Despite the head start, Toyota Motor Corp. has said it will start selling FCEVs to ordinary drivers starting in December, making it the first company to sell such cars commercially.

The price of the Toyota Mirai starts at roughly 7.23 million yen (US$61,500), which is significantly cheaper than the Tucson fuel-cell model that costs 150 million won (US$135,200).

The Japanese carmaker said it aims to sell some 400 of the small, four-seater cars in its home market and places like Britain, Germany and Denmark by the end of 2015. Many European countries have started building hydrogen charging stations that are critical if FCEVs are to take root as a viable form of everyday transportation.

Besides Toyota, Honda Motor Co. said it plans to market its own five-seat FCEV in 2015, with Audi unveiling the A7 Sportback H-Tron at the ongoing Los Angeles Auto Show. Germany's Daimler Group, which controls such brands as Mercedes-Benz, said it too is in the process of making an FCEV.

In contrast, Hyundai confirmed it sold a total of 190 vehicles in the last two years, with only two being sold in its home market.

The company has said the high costs of fuel cells that use precious metals are restricting sales, although it too is contemplating commercial sales by around 2020.

Regarding Hyundai's inability to really capitalize on its head start, an industry watcher stressed the company needs to do more to market its cars and bring down prices.

"Hyundai has been able to save face in the eco-friendly car race, dominated by Toyota, because it was the first off the line in the FCEV sector, but this achievement can be easily undermined if the company is not careful," the source said. He said that Hyundai needs to come up with further technological and manufacturing innovation to stay ahead of the pack.

Hyundai sources maintain that expanding sales is effectively impossible without more hydrogen-recharging infrastructure.

They said low-volume production and sales are natural and that things should pick up once other companies start making FCEVs. Such developments would spur the building of more recharging stations.

They also argued that its rivals are making specialized cars that may look unique, but are not really practical and suffer from cramped cabins and trunks. They said the Tucson, on the other hand, does not suffer from such shortcomings, with roughly the same internal dimensions as the regular combustion engine model.

Local market insiders said that South Korean carmakers also need to stay on their toes in the electric vehicle (EV) market following the recent announcement by the Seoul municipal government that it will offer subsidies of up to 20 million won for people purchasing electric vehicles.

Of the 617 applications for subsidies accepted, BMW's i3 ranked first with 297, with Kia Motors Corp.'s Soul EV ranking second with 161, and Renault Samsung Motors Co.'s SM3 ZE coming in at third with 81 applications.

Observers said that with Nissan to introduce the Leaf EV next month and India's Mahindra Group hinting it may launch the e2o EV in South Korea, the race for the EV market will intensify, making it imperative for local companies to improve their appeal.

yonngong@yna.co.kr
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