Hyundai Cuts Profit Outlook as Spending to Skirt Tariffs Bites

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(Bloomberg) — Hyundai Motor Co. raised its revenue forecast for 2025 while paring profit expectations as the South Korean automaker accelerates investment in the US to mitigate tariff costs.

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Unveiling its strategic plans ahead of Hyundai’s 2025 investor day in New York on Thursday, the world’s third-biggest carmaker said it will grow revenue 5% to 6% this year, two percentage points higher than what it forecast in January. It’s targeting an operating profit margin of 6% to 7% in 2025, one percentage point lower than previously guided.

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The carmaker is boosting spending in the US to get around tariffs on imported cars, though its plans have been complicated by deadlocked trade negotiations in the wake of an unprecedented US immigration raid on a Hyundai-LG Energy Solution Ltd. battery facility in Georgia earlier this month. Hyundai is bolstering its hybrid lineup to stoke demand in North America, a key growth driver, while introducing locally-designed or produced EV models in Europe, India and China.

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Hyundai Motor Chief Executive Officer Jose Munoz said the industry is facing “unprecedented transformation.” The automaker aims to localize production in key markets and leverage technologies from software-defined vehicles to next-generation batteries, he said.

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The carmaker is sticking to its goal of selling 5.55 million vehicles a year by 2030, roughly a third more than its target for 2025. About 60% of those will be electrified, meaning hybrid, extended-range, or pure battery-electric cars. It will invest 77.3 trillion won ($56 billion) worldwide by 2030.

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To get there, it’s adding four new models to its hybrid lineup for a total of 18 across the Hyundai and premium Genesis brands. The company is entering the midsize pickup and light commercial vehicle market, and introducing its first extended-range vehicle starting in 2027. It’s targeting annual sales of 350,000 for Genesis by 2030.

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Hyundai also aims to drive down battery costs 30% by 2027 to make its EV models more competitive, the company said.

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The plan now is to produce more than 80% of the vehicles sold in the US domestically by 2030, and increase US content in the supply chain from 60% to 80% in that time frame. 

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Although the US is Hyundai’s largest market, the immigration raid is straining diplomatic ties and has cast doubt over South Korea’s $350 billion US investment pledge.

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Just last month, Hyundai vowed to increase its investment in the US to $26 billion through 2028, up from the $21 billion it had promised in March. That earlier plan included $9 billion to increase US vehicle production, and $12 billion on other initiatives, including a new steel mill in Louisiana.

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While officials have reached a broad deal setting a 15% tariff on South Korean goods, which was reaffirmed at a White House summit last month, divisions over how to structure and execute the investment package mean the agreement is yet to be finalized.

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Hyundai and its affiliate Kia Corp. have been ramping up production at their factories in Alabama and Georgia to soften the blow from tariffs, while reviewing whether any output from Korea for the US market can be shifted to other sites. 

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—With assistance from Craig Trudell.

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