US Eases Fuel Efficiency Regulations... Hyundai Bets on Hybrids and EREVs for Market Breakthrough

Fuel Efficiency Regulation Eased to 14.7 km per Liter
Automakers Face Less Pressure to Sell Electric Vehicles

The U.S. administration has significantly eased automobile fuel efficiency regulations, bringing changes to the North American auto market. U.S. automakers, which had been relatively slow in the transition to electric vehicles, are now expected to gain more time as a result. Korean automakers such as Hyundai Motor Company and Kia are also anticipated to experience reduced pressure regarding electric vehicle sales.

On September 28 (local time), the U.S. Department of Transportation announced the decision to lower the Corporate Average Fuel Economy (CAFE) standard—implemented during the Joe Biden administration—from 50.4 miles per gallon (21.4 km/ℓ) to 34.9 miles per gallon (14.7 km/ℓ) by 2031.

This system enforces a minimum average fuel economy threshold for all vehicles sold by each manufacturer. The higher the baseline, the more automakers are required to increase the share of electric and hybrid vehicle models in their lineup.

Accordingly, with this regulatory easing, automakers are relieved from the pressure of having to rapidly increase their electric vehicle sales share. The shift to electric vehicles is expected to slow down, while sales of internal combustion engine (ICE) and hybrid electric vehicles (HEVs)—which are relatively more affordable—are projected to rise.

Korean automakers are also anticipated to increase sales of internal combustion engine models, particularly larger vehicles. For example, the fuel economy of Hyundai's Tucson gasoline model, the company's best-selling model in North America, is 12.3 km/ℓ, while the Santa Fe and Palisade achieve 10.2 km/ℓ and 9.4 km/ℓ, respectively. The Avante gasoline model records a fuel efficiency of 15.3 km/ℓ.

Since Hyundai Motor Company has built its North American strategy around hybrid electric vehicles (HEVs), the company is expected to flexibly boost sales of high-profit, large internal combustion engine vehicles in the short term, taking advantage of the eased regulations. Over the longer term, however, the company plans to target the market with a focus on HEVs and extended-range electric vehicles (EREVs).

During the second half of this year, Hyundai will launch Genesis’ first HEV, the GV80 Hybrid, in the U.S. market, and plans to introduce 10 new HEV models by 2030. The goal is to achieve a 50% share of HEVs in total sales.

Additionally, the company plans to release its first extended-range electric vehicle (EREV) in the first half of next year. The Santa Fe EREV is expected to be the initial model. EREVs provide a driving experience virtually identical to that of an EV under normal conditions, while offering greater flexibility in terms of recharging. When the battery runs low, a small engine functions as a generator to recharge the battery.

Meanwhile, according to U.S. automotive market research firm Cox Automotive, Hyundai Motor Group's combined sales of new vehicles—including Hyundai, Kia, and Genesis—in the U.S. during the third quarter of this year is projected to reach 511,421 units. This represents an increase of 6.5% compared to the same period last year.

This content was produced with the assistance of AI translation services.