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Trends in Eco-friendly Car Development

The ultimate goal of eco-friendly car development is a Zero Emission Vehicle (ZEV)

High oil prices and global warming are driving efforts to reduce dependence on oil and increasing awareness of the environment. As a result, the need for and interest in
eco-friendly cars is growing.
The use of eco-friendly cars will grow as various countries tighten emissions regulations, and competition among companies to secure a first-mover advantage and standardization will intensify.
Electric vehicle (xEV) technology can be used alone for purely electric vehicles (EV) or combined with combustion engines to produce hybrid vehicles (HEV). EVs do not emit any exhaust and are thus ZEVs.

The general trend is towrads eco-friendly cars with electric motors, and competition
between HEVs and EVs will intensify

HEVs use existing engine and transmission technology, and mature companies that were already strong in these areas will likely expand their activities in HEVs.
Purely electric vehicles (EVs) do not need engines or transmissions and only utilize existing car platforms. As a result, Chinese firms, which lack powertrain technology, Japanese firms that lag in HEV development, and venture firms, are taking the lead in EVs.
Although car manufacturers can be divided according to the focus on HEVs or EVs, batteries, BMS, electric motors, inverters/converters are core technologies necessary for both HEVs and EVs, and as a result, competition in these areas will intensify.

Electric Vehicle (xEV) Systems

The use of key components for xEVs will increase further

xEVs all use motors, and as a result batteries, BMS (battery management systems), inverters/ converters, and power control units are essential.
Even if EVs and FCEVs (fuel cell electric vehicles) continue to be pursued, the basic idea of electric propulsion will remain unchanged, and the core technologies for HEVs will continue to be used.
Batteries have high raw material costs and are thus an expensive component, and in order for xEVs to become more widespread, costs for batteries and other electric components must be reduced.

Development Roadmap for Domestic Auto Companies

Hyundai-Kia is focusing on developing eco-friendly cars, and mass production will begin in earnest in 2011

Among the 5 domestic auto makers, only Hyundai-Kia has the R&D capability to develop eco-friendly cars. The other makers are simply introducing cars developed by their parent companies into the domestic market.
Hyundai-Kia has been focusing on developing HEVs and FCEVs, and lags behind its rivals in developing and producing EVs.
GM Daewoo is planning to test-market plug-in hybrids (PHEVs) developed by GM in Korea in 2011, and may introduce them domestically depending on market conditions.
Renault Samsung is planning to introduce EVs developed by Nissan to Korea in 2011.
Ssangyong Motors has developed a ’Diesel SUV Hybrid System’ in accordance with government policies, and plans to implement it in new cars in 2011. However, these plans remain uncertain due to its current financial difficulties.
A consortium of small-to-mid size domestic firms that are developing EVs has been formed and plans to introduce an EV in the domestic market by the end of 2010. However, some legal hurdles must be clear first.

Key Domestic xEV Parts Companies

Motor Firms

Since the motor accounts for a growing proportion of propulsion for xEVs, power generation and efficiency must be increased while size and weight must be decreased.
Hyundai Mobis : Acquired Rotem’s motor business and thus independently has core xEV technology.
MB Corp : Has core and motor technology through alliance with Japanese firm, and has entered the xEV motor business.
Komotek : Specialized motor firm. Has technology for diesel SUV HEV motors and electric compressor motors.
S&T Daewoo : Plans to build upon production technology to expand supply of mid-size
MDPS and ISG.
Hyundai Heavy : In the testing phase for the development and mass production of motors for hybrid buses.

Battery Firms

Batteries are the core component for xEVs, and technology is shifting from nickel-based to lithium based batteries.
LG Chem : Able to compete with major global firms as a producer of LiPB for xEVs. Most active thanks to stable clients (GM, Hyundai-Kia).
SB Limotive : Joint venture with Bosch and Samsung SDI for LiPB production. Using Bosch’s network to seek clients, and recently contracted to supply batteries to BMW.
Kokam Engineering : Mid-size LiPB firm that has secured funding from foreign investors and is expanding in the U.S. market.
Enertech International : LiPB producer that has been acquired by the U.S. battery firm Ener1 as part of its Asian expansion strategy.
SK Mobile Energy : Has a technological advantage in lithium battery materials, has developed a LiPB battery and is seeking clients.

BMS Firms

BMS controls the safety and performance of batteries, and firms that have similar technology for use in household appliances are entering the xEV market.
Nexcon Tech : Has BMS technology for use in xEVs. Currently working to secure clients.
PowerLogics : Top domestic firm for cell phone PCM. Expanding into high capacity BMS.

Inverter/Converter/Capacitor Firms

The components that supply electricity in cars include inverters, converters, and capacitors, and inverters must be matched with the appropriate capacitors.
Samwha Capacitor : Produces all types of capacitors, except for electrolytic capacitors.
Developing film capacitors for use in inverters and ceramic capacitors that can be
miniaturized.
Samwha Electric : Has developed super-capacitor (EDLC) for use in HEVs. Currently developing inverter/converter products as well.
Sungmoon Electric : Specializes in producing film, a key raw material for capacitors.
Currently mass producing film for use in HEVs.
Pilkor Electronics : Specializes in film capacitors. Has developed capacitors for use in HEVs and is now working to secure clients.
Nuintek : Produces both capacitors and film and has strong cost competitiveness. Has been selected as a supplier for Hyundai-Kia.
LS Mtron: Was spun off from LS Industrial System and produces circuitry materials. Now holds world-class technology in super-capacitors (ELDC).
LS Industrial System : Has experience producing a wide variety of products for industrial electric equipment. Now supplies PCUs and various relays for HEVs to Hyundai-Kia and overseas.
Dongah Elecomm : Top domestic firm for electric equipment for telecommunications.
Supplies converters for HEVs to Hyundai-Kia.

Financial Condition of Key Parts Companies

[Motors] Komotek has high growth, profitability and financial stability. MB Corp continues to have low profitability and weak stability, and is thus in urgent need of improvement.
[Batteries] LG Chem and Kokam have high growth and profitability and are stable. Financial stability is deteriorating for SK Mobile Energy and Enertech.
[BMS] Although sales are growing strongly for BMS firms, they have rising debt ratios
and lack short-term liquidity.
[Inverter/Converter/Capacitor] Film capacitor firms have relatively good growth and
profitability. Sungmoon Electric is highly stable, but Nuintek, Samwha Electric and Dongah Electric lack short-term liquidity.

Competitive Analysis by Company

A mid-to-long term horizon is needed for xEV-related sales to rise for each firm. During this time, firms should have a business structure and sufficient funding to cover R&D investment and strengthened marketing.
In order for Hyundai Mobis to maintain its position as a supplier of core components
to Hyundai-Kia and its cost competitiveness, it must acquire or become affiliated with
a firm that can supply core components for xEV modularization.
Hyundai Heavy is focused on buses, commercial vehicles, and HEV systems for heavy machinery. As a result, it will expand its influence in motors and controllers for these markets.
Although Komotek possesses motor technology for SUV-HEVs, domestic firms have no definite plans to commercialize this area. As a result, expansion of this business will take a considerable amount of time.
Unlike LG Chem and SB Limotive, SK Mobile Energy lacks major clients. However, it is likely to secure clients in the near future through its parent company, SK Energy and the rest of the SK Group, and will quickly expand its business.
Firms that are developing BMS/Capacitors/Converters typically have technology and clients in household appliances and telecommunications. As a result, they have low reliance and risk exposure to xEV.
Nuintek and Dongah Elecomm, which supply Hyundai-Kia, have low growth, profitability and stability. However, their condition is likely to improve as HEV sales expand and they gain a first mover advantage in this market.
Sungmoon Electric specializes in film, which is a key raw material for capacitors, and thus has significant market power both domestically and abroad. As the global xEV market expands, the firm’s sales are expected to continue growing.
Although Samwha Capacitor and Samwha Electric have recorded weak sales, their growth and profitability could improve if they are able to use their specialized xEV capacitor technology to secure major clients.
LS Group, including LS Mtron and LS Industrial System, have technology for high-pressure electric equipment and the marketing ability to build a global sourcing network. As a result, as the xEV segment grows, their global market power will also rise.