Hyundai Motor Group plans to expand hybrid offerings across its entire US lineup to cushion profitability from US tariff fallout while hoping to narrow the gap with market leader Toyota Motor Corp.
According to industry sources and foreign media reports on Wednesday, Hyundai Motor Co. plans to roll out a hybrid variant of the all-new Palisade in the US later this year, marking the company’s first entry into the full-size hybrid sport utility vehicle segment.
The new hybrid trim will be powered by Hyundai Motor’s proprietary next-generation hybrid system, boosting combined output to 334 horsepower from 295 in its gasoline predecessor.
Its sibling Kia Corp. is also expected to follow next year with a hybrid version of its next-generation Telluride, a US-only full-size SUV, along with a hybrid trim of its redesigned compact SUV Seltos, said sources.
Hyundai is also considering exporting the Kona hybrid, already sold in Korea, or adding a hybrid variant to the gasoline-only Venue.
The additions would give the Korean motor group hybrid offerings across every major US segment for the first time in 2026.
It currently offers hybrid variants of the Niro (subcompact), Sportage, Tucson, Elantra (compact), Santa Fe, Sonata, Sorento (midsize) and Carnival (minivan).
HYBRID CAR SALES HOLD UP IN THE US
Hyundai’s hybrid push in the US comes as hybrid car demand in the country stays strong.
In the first half of this year, hybrid car sales in the world’s second-largest auto market jumped 42% year-over-year to 1.01 million units.
Hyundai Motor and Kia also sold 164,913 units of hybrid cars together in the market in the first seven months of this year, up 45.8% from the same period of last year.
The brisk sales lifted the share of hybrid cars in their total US car sales to 15.7% from 11.8% over the same period.
As the US government’s $7,500 tax credits for new EV purchases and leases are set to expire on Sept. 30, consumer demand is also expected to be redirected from EVs to hybrids, boding well for hybrid sales.
TO MITIGATE TARIFF FALLOUT
Hybrids promise higher returns as they typically sell for about 10% higher than gasoline models.
Considering large SUVs are the mainstream model in the US, the addition of pricier full-size hybrid variants is expected to help the Korean carmaker mitigate losses from Washington’s 15% levy on imported cars.
Hyundai Motor reported its first double-digit profit fall in five years in the second quarter despite posting record second-quarter sales, hit by the US government’s tariffs on foreign-made cars, implemented in April.
With the move, the Korean auto giant is also upping the ante in the US hybrid market dominated by Toyota with a 54.9% share.
Toyota already offers hybrids across nearly every segment, from subcompact cars to large SUVs and pickup trucks.
Of its total hybrid car sales of 922,000 units in the US last year, 330,000 units, or 33%, were large vehicles such as Toyota Highlander SUV and Tundra pickup.
In May, Toyota even released a new version of its RAV4 exclusively as a hybrid.
MORE LOCAL PRODUCTION
To tap solid hybrid demand, Hyundai Motor is reviewing a plan to produce hybrid models in its US plants, including Hyundai Motor Group Metaplant America (HMGMA), its first flagship EV production site in the US.
In March, the Korean auto group opened the plant in Ellabell, Georgia – part of the Korean automaker’s largest US investment and the largest economic development project in the state’s history.
The new plant, sprawling over 11.8 million square meters – roughly four times the size of Seoul’s Yeouido financial district – will be ramped up to produce 500,000 units a year within the next few years.
Hyundai is now among the top four brands in the US and No. 3 globally.
Hyundai Motor Group sold 1.71 million vehicles in the US in 2024 – 910,000 from Hyundai and 800,000 from Kia – ranking fourth behind General Motors with 2.69 million units, Toyota with 2.33 million and Ford with 2.07 million.
By Gil-Sung Yang and Bo-Hyung Kim
vertigo@hankyung.com
Sookyung Seo edited this article.
