Hyundai Motor Drives Forward Despite Nikola Fraud Allegations

Hydrogen Technology Competitiveness Gains More Attention
Strength in Building Production and Management Ecosystem
Electric Vehicle Sales Expansion Also Drives Growth

[Asia Economy Reporter Minji Lee] Despite a negative investment environment for hydrogen vehicles and the strength of the Korean won, Hyundai Motor Company continues to maintain an upward trend. The securities industry expects short-term stock price adjustments, but due to the Nikola fraud allegations, Hyundai's technological competitiveness may receive more attention, and with the anticipated expansion of electric vehicle sales, further stock price increases are expected.

According to the Korea Exchange on the 22nd, as of 11 a.m., Hyundai Motor recorded 180,000 won, down 2.7% from the previous session, appearing to take a breather. However, looking at a broader timeframe, Hyundai Motor has risen about 85% over the past three months, overwhelmingly outperforming the KOSPI increase rate (11.5%). This is interpreted as being influenced by a favorable automobile sales environment compared to other competitors and rising expectations for hydrogen fuel cell vehicles due to the government's New Deal promotion plans.

The hydrogen commercial vehicle sector, which led the stock price increase, plans to start full-scale operations in Europe from next year, followed by China and the United States. Hyundai's competitiveness lies in having established an entire ecosystem from hydrogen production to distribution, vehicles, manufacturing, and subscription services.

Nikola, which had previously announced plans to build a hydrogen ecosystem through partnerships, plummeted about 35% since the 10th due to fraud allegations and the resignation of founder Trevor Milton. In Korea, hydrogen vehicle-related stocks such as Hyosung Heavy Industries (-8%), Sejong Industrial (-8%), and Hyosung Advanced Materials (-5%) have shown sharp declines over the past five trading days, but Hyundai Motor has maintained its upward trend.

The market views Nikola's fraud allegations as an opportunity to prove Hyundai's competitiveness in hydrogen technology. It is explained that a more positive perspective on Hyundai's future eco-friendly technology may emerge. Jaeil Lee, a researcher at Eugene Investment & Securities, said, "Compared to Nikola, whose credibility has been damaged, Hyundai's product reliability is very high and immediate supply is possible," adding, "This gives Hyundai an advantageous position in the U.S. market order competition, increasing the likelihood of large-scale long-term supply contracts similar to those in Europe."

Although the won-dollar exchange rate has dropped to 1,150 won, creating a negative exchange rate environment, it is not expected to significantly impact earnings. Historically, when the won-dollar exchange rate falls, food and beverage stocks that import raw materials from overseas and airline and travel stocks benefiting from increased travel demand have shown upward trends, while semiconductor and automobile stocks, which focus on exports, have tended to decline. However, it is now assessed that the impact will not be significant. Kyungmin Lee, a researcher at Daishin Securities, analyzed, "The profit growth potential for next year of representative export stocks, semiconductors and automobiles, is 39% and 53%, respectively, making the exchange rate effect insufficient to affect the earnings growth trend next year," and added, "Expectations for earnings improvement due to global economic recovery are greater."

The securities industry’s estimates for Hyundai Motor's third-quarter sales and operating profit are 25.7202 trillion won and 1.0414 trillion won, respectively. With increased domestic demand and rising market share in North America, expectations for second-half earnings have risen, and forecasts also reflect the possibility of expanding electric vehicle market share in Europe. Sunwoo Kwon, a researcher at SK Securities, said, "Unlike competitors who have entered production cuts or restructuring, Hyundai is continuously strengthening competitiveness through new investments and research and development," and added, "Considering continuous new model launches, cost improvements, and expense reductions, Hyundai is expected to widen the gap with competitors in the second half."

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