Hyundai Will Launch Dedicated Green Vehicle Brand in 2016

By · November 13, 2015

Hyundai Sonata Plug-in Hybrid

Hyundai will launch a new dedicated green car brand, according to a report this week in The Korea Herald. This news comes on the heels of Hyundai’s official announcement that it will launch a new luxury brand called “Genesis.”

According to reports, the Hyundai green brand will be dubbed “AE,” although no explanation was given about the significance of the letters. Its first product is expected to be a conventional no-plug gas-electric hybrid model, aimed at competing with the Toyota Prius. Following the launch of the new hybrid, Hyundai is expected to release plug-in hybrid and pure EV versions of the same car. That would make it the industry's first single model to offer hybrid, plug-in hybrid and EV variants. However, the new brand will not include battery-free gasoline or diesel models.

In October 2014, Hyundai released an EV under its Kia brand—the Soul EV—and has a plug-in hybrid version of the Sonata set to hit the market this month. The Kia Soul EV, which sells for about $35,000 before incentives, offers a driving range of 93 miles. Sales have been limited—an average of fewer than 100 units per month in 2015.

The Hyundai Sonata Plug-in Hybrid will begin deliveries in the coming weeks. The Sonata plug-in has an all-electric range of 27 miles. Like the Soul EV, the Sonata plug-in isn’t intended to fiercely compete against the segment-leading Chevy Volt, and perhaps not even against Ford’s two plug-in hybrids—but rather it should be viewed as an initial foray into the plug-in market.

The new brand signifies Hyundai’s decision to separate its most fuel-efficient vehicles from its top sellers. So, the decision can be seen as an attempt to test the market—but also to insulate the larger brands against risk, if the plug-in models are seen as too expensive or not mainstream.

Two Marketing Pathways

The list of automakers that use existing brands and models to introduce plug-in offerings includes: Audi, Fiat, Ford, Honda, Porsche, Toyota and Volkswagen. Yet, Hyundai is certainly not the first to attempt a distinct brand for vehicles using alternative fuel-saving technologies. BMW has its “i” brand to sell a pure EV and a plug-in hybrid—and Chevrolet uses the term “Voltec,” to describe its extended-range electric vehicle technology. The industry, in fact, is loaded with sub-brands for technology packages, including Ford’s “Ecoboost,” and Mazda’s “Skyactiv.”

While the strategy behind these decisions isn’t always clear, Hyundai apparently will use the new brand to try to convince consumers and analysts that it’s serious about alternative powertrains. It’s not clear if or how Hyundai’s relatively robust hydrogen fuel-cell electric program fits into these efforts.

Regardless, Hyundai and other carmakers know they need to build competitive plug-in models in order to keep pace with rising emissions and zero-emissions mandates. In addition, the company needs to start competing in the plug-in vehicle market, so it can more fully participate by the time plug-in sales grow past its early stage and into mainstream viability.

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