Hyundai Kia Labor and Management Begin Full-Scale Talks on Establishing Electric Vehicle Dedicated Factory

Agree on the Need for Company Establishment... Cautious About Timing
Proposes 'At Least 100,000 Units' as Additional Import Criteria

[Asia Economy Reporter Kim Ji-hee] The establishment of dedicated electric vehicle (EV) factories has emerged as a key issue in this year's wage and collective bargaining negotiations (wage and collective agreement, or wage and collective bargaining) between Hyundai Kia Motors' labor and management. While the labor union is demanding the creation of dedicated factories, the management has acknowledged the inevitability of additional introductions but expressed a cautious stance on the timing.

According to industry sources on the 4th, Hyundai Motor stated in the fourth round of this year's wage and collective bargaining negotiations on the 1st, "We agree on the necessity of operating dedicated EV lines due to the spread of electrification," but added, "However, considering the uncertain EV market situation, hastily establishing additional dedicated lines could lead to inventory buildup and employment instability."

They also presented a benchmark for establishing dedicated lines, requiring "securing a volume of at least 100,000 units." Additionally, they emphasized that manpower and processes must be rearranged to suit EV production and that securing manufacturing competitiveness should precede this. This was the company's first concrete response regarding the union's demand for dedicated EV factories.

In the 2020 wage and collective bargaining demands, the union included not only dedicated EV production factories but also the E-GMP platform, EV PE module engines, and cooling production for electronic components. During negotiations, the union argued, "According to the '2025 Strategy,' Hyundai plans to produce 670,000 EVs by 2025, necessitating the establishment and additional designation of dedicated EV production factories," and added, "The inefficiency caused by mixed production of EVs and internal combustion engine vehicles is severe."

Rendering images of the product lineup for Ioniq, Hyundai's dedicated electric vehicle brand to be launched sequentially from next year. (From left) Ioniq 6, Ioniq 7, Ioniq 5 (Photo by Hyundai Motor Company) [Image source=Yonhap News]

Currently, Hyundai Motor has confirmed and is preparing to convert Line 2 within Ulsan Plant 1 into a dedicated EV line next year. Labor and management have tentatively agreed to secure two factories as dedicated lines by 2024, including this one. However, while the union demands the establishment of dedicated EV 'factories,' the management uses the term dedicated 'lines,' showing a cautious atmosphere regarding additional introductions.

This year marks the first time the union has brought detailed demands related to electrification models in the wage and collective bargaining negotiations. Among these, the establishment of dedicated EV factories is by far the most significant concern, aimed at actively responding to future vehicle production and maintaining employment. Since EVs and hydrogen electric vehicles require about 30-50% fewer parts, manpower demand is lower. External advisory members of the first Employment Stability Committee, jointly participated in by labor and management last year, also analyzed that a reduction of about 20% in manufacturing personnel by 2025 is inevitable due to these changes.

Furthermore, regarding the union's demand for in-house production of core EV components, management expressed a negative stance. The management stated, "Electrification parts are developed by other parts suppliers, and direct production raises concerns about quality assurance and spatial constraints," and added, "Bringing in parts volumes from suppliers rather than creating new jobs will inevitably provoke social backlash."

At the same-day second main negotiation session combined with a management status briefing for Kia Motors' labor and management, specific plans for securing resources in preparation for the EV transition were also mentioned. At that time, management referred to the mid-to-long-term strategy 'Plan S,' which aims to launch 11 EV lineups by 2025, stating, "The more EVs are produced, the more existing internal combustion engine vehicles will inevitably be replaced." They also said, "We plan to secure profitability in emerging markets by producing internal combustion engine vehicles and use those resources to convert to EV lines."

However, like Hyundai Motor, Kia showed a cautious attitude regarding the specific timing of the transition. Kia stated, "The speed of the EV transition could accelerate or slow down, so there is high variability in the plan," and added, "The timing of applying (dedicated lines) may change."

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