Hyundai Motor Group is struggling to find ways to boost the poor sales performance of the Nexo hydrogen fuel cell electric vehicle (FCEV). Although hydrogen vehicles are one of Hyundai Motor Group's key future businesses, the Nexo has failed to establish a foothold in the finished car market even after seven years since its launch in March 2018 due to a lack of charging infrastructure and government regulations.
According to sources within Hyundai Motor Group, Vice Chairman Jang Jae-hoon, considered the group's second-in-command, recently instructed the Public Communication Office (PCO), the control tower overseeing public relations, to work towards easing regulations related to hydrogen vehicles. Despite the launch of the second-generation model in June, the push to 'rescue the Nexo' was initiated as notable sales results did not emerge during the early stages.
From January to July this year, the domestic sales of the Nexo amounted to 1,726 units, a 3.7% decrease compared to the same period last year. The sales of the Nexo fell below 100 units for three consecutive months from April to June. It was only after the release of the fully refreshed second-generation model on June 10 that sales in July reached 1,001 units.
The Nexo was met with great expectations, as Chairman Chung Eui-sun appeared on stage at the Consumer Electronics Show (CES) held in Las Vegas, USA, in January 2018 to unveil it. Although Nexo sales grew to 5,786 units in 2020, 8,502 units in 2021, and 10,164 units in 2022, sales sharply declined to 4,328 units in 2023 and 2,751 units last year.
Hydrogen vehicles gained attention during the administration of former President Moon Jae-in. In the year the Nexo was launched, former President Moon visited Hyundai's Namyang Research Institute, test drove the vehicle, and used it as an official car. In June of that year, he also announced a policy to expand the distribution of hydrogen vehicles. Hydrogen vehicles were perceived as a business that aligned with the Moon Jae-in administration's energy policy centered on eco-friendliness and renewable energy, allowing them to receive substantial support.
Under the Yoon Suk-yeol administration, support for hydrogen vehicle initiatives has been significantly reduced. In the first year of the Yoon administration in 2022, the budget proposal from the Ministry of Environment reduced funding for hydrogen vehicle distribution and hydrogen charging station installation from 892.8 billion won to 667.8 billion won, a 25% decrease. Domestic sales of the Nexo began to decline after the Yoon administration took office.
The Lee Jae-myung administration is also advocating eco-friendly energy policies, similar to the Moon Jae-in administration. Accordingly, Hyundai Motor Group appears to have begun activating its public relations organization, viewing it as an opportunity to ease regulations on hydrogen vehicles and increase government support.
One of the most urgent goals that Hyundai Motor Group aims to pursue is to extend the replacement period for hydrogen fuel tanks from the current 15 years to over 30 years. The Nexo is equipped with three hydrogen fuel tanks, each costing over 4 million won to replace. Continuing to drive a Nexo after 15 years would incur approximately 13 million won in expenses. This has made the Nexo undesirable in the used car market, and new car sales are also sluggish.
Easing regulations to allow for 'self-charging' of hydrogen vehicles is also a task being pursued by the PCO. Currently, when charging hydrogen in Korea, assistance from a dedicated employee is mandatory. The finished car industry analyzes that both the inadequate charging infrastructure and the inconvenient charging methods have affected the inability to rebound hydrogen vehicle sales domestically.
A representative from Hyundai Motor Group noted, "With electric vehicles also recently struggling with poor sales, few consumers are likely to readily purchase a hydrogen vehicle that is inconvenient to charge and whose used car prices have significantly dropped," adding, "In order for the Nexo to rebound, easing government regulations is urgently needed."