For the first time, Hyundai is set to manufacture vehicles for an outside brand on contract, reaching an agreement with BAIC to build EVs for the Arcfox brand.
The brand’s vehicles will be produced by Beijing Hyundai Motor Co, the joint venture the South Korean firm has had with BAIC since 2002. Production will be handled by the company’s facility in Chongqing, China, and current reports indicate that Beijing Hyundai will also oversee the design and quality control of the vehicles.
The deal is considered an important move by Hyundai to increase its footprint in the increasingly competitive Chinese market. At one stage, Hyundai accounted for 7% of all new car sales in China but its market share fell to less than 1% last year selling just 254,000 vehicles. It posted an operating loss of $598 million in China through 2022.
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“The cooperation suggests Hyundai has yet to give up the Chinese market,” a source told The Korea Economic Daily. “Hyundai is trying to rebuild a bridgehead for expansion in the country by establishing an EV production line.”
It is unclear which Arcfox models Hyundai will produce at its joint venture factory. One of them will probably be the sleek Alpha-S sedan. The car was first introduced in 2021 and relies heavily on Huawei technology. A host of other vehicles have been unveiled by Arcfox since, including the Alpha-T SUV and most recently, the Arcfox Kaola, conceived as an MPV for young women with children.
Production of the oddly-spelt Kaola started earlier this year and deliveries will begin shortly. All variants are powered by a single electric motor at the front axle that produces 163 hp while power is sourced from a 58.86 kWh battery pack from CATL.
It is reported that Hyundai had planned to launch its Ioniq models in China but has since decided against doing so, believing it stands little chance to compete with local rivals.
