Hyundai Motor Group is accelerating its push to vertically integrate its electric vehicle operations, as it works to narrow the gap with global leaders BYD and Tesla, both of which have built significant in-house capabilities across the EV supply chain.
The effort comes as cost pressures mount and price competition intensifies across the global EV market. China’s BYD and US-based Tesla have secured a competitive edge by internalizing key components—including battery materials, vehicle semiconductors, EV platforms and software—enabling them to reduce costs and respond faster to market shifts.
According to battery industry officials, Hyundai’s vertical integration ratio for EVs remains well below its rivals, at an estimated 40–50 percent. That compares with 70–80 percent for BYD and 60–70 percent for Tesla. The figure reflects the proportion of core EV components developed or manufactured in-house by automakers.
Currently, Hyundai’s in-house capabilities include battery packs (via Hyundai Mobis), electric motors and inverters, its proprietary E-GMP EV platform, as well as software and operating systems through affiliates such as 42dot and Hyundai AutoEver.
However, the company continues to rely on outside suppliers for the majority of its EV components—leaving it more exposed to supply disruptions, rising input costs, and geopolitical risks.
With global EV demand softening and consumer price sensitivity rising, cost control has become a strategic priority. Battery costs alone account for around 40 percent of a typical EV’s total production cost, prompting Hyundai to seek greater self-reliance in this area.
In a signal of its evolving approach, Hyundai affiliate Kia recently chose to equip the domestic version of its EV5 compact SUV with cost-effective NCM batteries from China’s CATL. The decision follows similar moves in the Kona Electric and Niro EV and is seen as a pragmatic choice to improve affordability in the South Korean market.
Hyundai is also investing in long-term R&D capabilities. A large-scale battery research center in Anseong, Gyeonggi Province, is set to open in 2027. The site will include facilities for battery design, trial production, and performance testing—marking a major step toward building internal battery expertise.
BYD, the world’s top EV maker by unit sales, is widely considered the model of EV vertical integration. The company started as a battery manufacturer and continues to make its own batteries, including the Blade Battery produced by its FinDreams subsidiary. This control has allowed it to dominate the lower end of the global EV market with aggressively priced models.
BYD is also expanding upstream, investing in or acquiring mining assets in Latin America and Africa to secure supplies of lithium, nickel and other critical battery minerals. It has also internalized a wide range of technologies and services, including battery management systems, automotive semiconductors, drive motors, software development and even maritime logistics via its own fleet of PCTC (pure car and truck carrier) ships.
Tesla has built a comparable degree of integration. Since declaring its intent to internalize battery production in 2020, it has successfully developed its proprietary 4680 cylindrical battery cells and moved into lithium refining. It also controls its own operating system, software architecture and Supercharger network.
