Bulletin
Investor Alert

New York Markets After Hours

Jan. 22, 2020, 7:00 a.m. EST

Kia Motors announces 'Plan S' strategy to spearhead transition to EV, mobility solutions by 2025

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

SEOUL, South Korea, Jan 22, 2020 (GLOBE NEWSWIRE via COMTEX) -- -- Kia to launch a dedicated EV model in 2021

-- Kia to reach 25% share of its sales from eco-friendly vehicles by end of 2025

-- Global annual sales target of 500,000 EVs, 1 million eco-friendly vehicles by 2026

-- Mobility products and services to prioritize customer value

-- Kia to enhance profitability by improving existing businesses and leadership in future businesses

-- Kia to enter PBV market for corporate customers, offer customized PBVs

-- Kia to invest 29 trillion won (US $25bn) by 2025

-- Company targets 6% operating margin and 10.6% ROE in 2025

-- CEO Han-woo Park: "Kia Motors will transform itself into a ceaselessly innovative brand by accelerating its bold and preemptive transition to future businesses"

Kia Motors Corporation has announced last week details of 'Plan S', its mid- to long-term strategy aimed at progressively establishing a leadership position in the future automotive industry, encompassing electrification and mobility services, as well as connectivity and autonomy.

The Plan S strategy outlines Kia's preemptive and enterprising 'shift' from a business system focused on internal combustion engine vehicles toward one centered on electric vehicles and customized mobility solutions. The company's ongoing brand innovation and profitability enhancement will support the two-track Plan S strategy targeting the shift toward electric and autonomous vehicles as well as mobility services.

Alongside Kia's 2025 financial and investment strategy, details of Plan S were announced to shareholders, analysts and credit-rating agencies at the company's CEO Investor Day in Seoul today.

By the end of 2025, Kia plans to offer a full line-up of 11 battery electric vehicles. With these models Kia is looking to achieve a 6.6% share of the global EV market (excluding China), while also attaining a 25% share of its sales from its eco-friendly cars. With the global EV market expected to gain strength by 2026, Kia is aiming for 500,000 annual EV sales and global sales of 1 million eco-friendly vehicles (excluding China).

Alongside these objectives, Kia will offer EV-based mobility services as part of its new business model, helping solve global urban problems such as environmental pollution. In the Purpose Built Vehicle (PBV) market, anticipated to grow on the back of expanding car-sharing and e-commerce businesses, the company will secure leading-edge competitiveness.

'Plan S': Kia's second-generation future businesses







        Preemptive transition   Lead popularization of EVs
        to EVs                  -- Launch a dedicated BEV model in 2021
                                -- Establish a full EV line-up of 11 models and reach a 6.6% global EV market share by 2025
                                -- Sell 500,000 BEVs and one million eco-friendly vehicles by 2026
                                -- Simultaneously offer derivative EV models and dedicated models with differentiated pricing and specification
                                -- Nurture key developed markets as major bases for EVs; achieve a 20% sales share out of all Kia models by 2025
                                -- Selectively introduce EV models in emerging markets; and raise sales of ICE vehicles
                                -- Adopt development system for EV architecture
                                -- Achieve EV sales innovation
        Provision of customized Pursue mobility services based on electric and autonomous vehicles, enter PBV business
        mobility solutions      -- Establish Mobility Hubs in cities with stricter environmental regulations and greater use of EVs; and provide eco-friendly mobility services
                                -- Explore new business models such as logistics and car maintenance via Mobility Hubs
                                -- Operate mobility services based on electric and autonomous vehicles in the long term
                                -- Lead PBV markets for corporate clients; offer customized PBVs for target customers
        


Plan S will see Kia Motors invest a total of 29 trillion won (US $25 billion) by the end of 2025 to establish leadership in vehicle electrification and diversify its business. By the end of this period, Kia Motors is targeting a 6% operating profit margin and 10.6% return on equity (ROE) ratio to secure the necessary capital and maximize shareholder value.

"As the auto industry undergoes turbulent changes, today is also an opportune time for Kia Motors to radically transform itself into a global enterprise dedicated to spearheading customer value-led innovations," said Kia Motors President and CEO Han-woo Park. "Kia Motors will actively innovate to take on the challenges ahead, identifying and capitalizing on new opportunities to propel the company forward."

CEO Park added: "Plan S is a bold and enterprising roadmap for Kia's future business transition, buttressed by the two pillars of electric vehicles and mobility solutions. Our approach is to put customers first, and Kia will reinvigorate its brand innovation by developing products and services that offer new experiences for customers."

As the two strategic objectives of Plan S, Kia will concentrate on (1) leading the popularization of electric vehicles, and (2) expanding mobility services for electric and autonomous vehicles, as well as entering the PBV business.

The company will pursue innovations across the board, encompassing brand identity, corporate identity, design identity and user experience, among other fields. Kia aims to enable customers to directly feel, experience, and understand the company's evolution as an enterprise championing EVs and mobility solutions.

Kia's new brand system, which is slated to be revealed in the second half of this year, is currently being formulated under clear objectives. This includes becoming a pioneer in the age of EVs, a brand beloved by the millennial generation (those with a good grasp of information technology born between the early 1980s and early 2000s, a period witnessing the transition from the analog to the digital era) and Z generation (those born after the mid-1990s and grown up largely in a digital environment with a natural inclination for using digital tools, hence their nickname, 'digital natives'), and a symbol of challenge and innovation.

At the same time, the company plans to maximize shareholder value and win more trust from the market by steadily strengthening its competitiveness through innovation of existing businesses, as well as by increasing profitability of future businesses.

Preemptive transition to EV business

Kia will focus on securing its leadership in the global EV market by adopting a strategy of product differentiation, such as launching a dedicated EV model, as well as by establishing a company-wide innovation system.

Kia plans to lay the ground for its great leap forward by transitioning to an EV-based business system ahead of competitors, leveraging its production capabilities in manufacturing internal combustion engine vehicles.

By prioritizing future customer value, the company also plans to develop and release innovative EV models, offering a differentiated product appeal, such as an EV-specialized design, user experience and quality. Starting with the launch of its maiden dedicated EV model in 2021, Kia will establish a full EV line-up of 11 models by 2025, adding new EV models to its whole line-up along the way, including passenger vehicles, SUVs and MPVs from 2022.

The dedicated EV model to be launched 2021 will be built on a unique platform specifically engineered to accommodate the car's world-leading EV powertrain and technologies. It will offer a crossover design which blurs the boundaries between passenger and sport utility vehicles, a future-oriented user experience, a single-charge driving range of over 500 kilometers, and sub-20-minute high-speed charging time.

Across its EV line-up, Kia plans to operate two different types of EVs with different charging capabilities (400V/800V) -- high-performance dedicated models and derivative models with reasonable pricing -- to meet the diverse needs of customers.

Growth in global EV sales will be pursued in accordance with a customized, market-oriented strategy, which considers regional differences in environmental regulation, subsidies, infrastructure and more.

In Korea, North American, Europe, and other developed markets which face stricter fuel-efficiency standards, the company will foster the development of the EV industry. A full EV line-up will be established in these markets by 2025, and the sales of EVs will account for about 20% of Kia's total sales in developed markets.

In emerging markets, Kia will focus on expanding sales of internal combustion engine vehicles, while reviewing the selective entry of EVs depending on demand in each market.

By adopting an innovative EV architecture (basic vehicle framework) development system, the company will establish a structure of planning, development and production, capable of maximizing customer value by effectively incorporating market demands from the early product planning stage.

Through these process innovations, which enable the cost- and time-efficient development of a diverse range of EV models, Kia expects to bolster its EV competitiveness.

At the same time, the company has advanced all-around strategic investments and collaboration in the form of open innovation for internalizing technologies and constructing infrastructures.

Significantly, in May last year, Kia invested in Croatian performance EV manufacturer Rimac Automobili; and in September invested in IONITY, which specializes in building high-speed charging infrastructures. The IONITY investment in particular will pave the way for advancing Kia's business of high-speed recharging infrastructure development in Europe and other major countries.

Promoting mobility services; entry into PBV business

Kia will diversify its business to offer eco-friendly mobility services centered on electric and autonomous driving across major global cities. It will also enter the Purpose Built Vehicle (PBV) market, where demand is expected to grow amid the proliferation of e-commerce and car sharing, eventually securing a new corporate client base there.

In key global cities that are actively responding to climate change and supporting EV popularization, Kia will collaborate with local partners to establish Mobility Hubs that house EV charging stations, vehicle maintenance centers and various convenience facilities.

These Mobility Hubs will be utilized as transfer stations between electric vehicles and internal combustion engine vehicles, the latter of which cannot enter certain urban areas due to environmental regulations. Using various infrastructures such as charging stations and convenience facilities inside the Mobility Hubs, Kia will explore new business models.

1 2
This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.