2018 Hyundai Ioniq

It seems Hyundai underestimated the demand for the IONIQ Electric and didn't order enough batteries from LG Chem. Now, it pays the price.

2017 Hyundai Ioniq Electric is currently a region-limited (think CARB) offering

That's a problem, but there is a solution.

Business Korea reports that Hyundai initially told LG Chem that it need batteries for up to 7,000 IONIQ Electric cars. It's not clear if that's an annualized figure, or just a partial number by year's end.

Here's the wording from Business Korea:

"Hyundai Motor initially ordered 6,000 to 7,000 EV batteries at LG Chem to produce the Ioniq EV."

It now appears as though demand for the IONIQ Electric is far higher than anticipated. As a result, Hyundai is attempting to increase production on its side, but LG Chem won't be able to match that with increase battery production, at least not immediately.

This is a unfortunate reality that InsideEVs has explained on many occasions whenever OEMs tout the ability to quickly "increase production" due to unseen demand (which as we know, rarely ever actually materializes) - without accounting for the fact they don't have an existing commitment to a 3rd party battery supplier for those cells.

3rd party battery suppliers aren't idling sitting by with 2x or 3x capacity ready to go (and without an open contract for) just in case an automaker needs it; instead batter suppliers sell all the available capacity they can to maximize profits.

Hyundai IONIQ Electric In Marina Blue

Business Korea states:

"...the company has difficulties in production as the demand of the Ioniq EV turned out to be two times higher than expected due to the EV syndrome at EV contests held by local governments earlier this year. In particular, LG Chem is seeking to boost production to meet the growing demand, but it is struggling to supply batteries to Hyundai Motor as well as other automakers."

It's unclear what the new target is, and there's really no indication that LG Chem can push out additional batteries for the IONIQ Electric all that quickly. Something we have seen we incredibly tight supply so far this year.

Our previous report on the IONIQ Electric suggested that Hyundai was upping production substantially - but still well below demand:

"In Hyundai’s home market of South Korea, where the IONIQ Electric has already become the best selling all-electric model, customers are now looking at wait times up to 4-5 months to get the car." "In the US, good luck finding hardly any in customer’s hands today (99 sold through May), let alone in dealer stock." "With 5,581 sales in South Korea though the end of April, and a waiting list a mile long at home, clearly Hyundai’s aim right now is to service its domestic market before refocusing on the rest of the world." "Thankfully, Hyundai is not only aware of the problem, but intends to remedy the situation somewhat with a 50% production boost from 1,200 a month to 1,800 a month." "Half of that production is ear-marked for South Korea (600 today, soon 900). The automaker says it will take until July at the earliest to see those extra EVs start to arrive, meaning for the rest of the world, the Ioniq Electric drought will likely continue until at least September."

Hyundai IONIQ Electric

But now all of that may be difficult to achieve (or increase production further) due to lack of batteries from LG Chem - or rather a lack of accurate forecasting by Hyundai. Car production can't increase without battery packs to power them. We'll see how this plays out soon.

As for Hyundai's take, they say there is no shortage, as Green Car Reports reached out to Hyundai late last month and got some response from the company's PR department:

"We’ve seen nothing to indicate any shortage. I don’t know how that started; can’t find anything to support it." - Jim Trainor, acting public-relations director at HMA

With due respect to the fellow whose job it is to spin the news at Hyundai, we'd say given fact there has been no inventory over the past ~6 months, and that there is wait times of 4-5 months for new orders in South Korea, and the max global production for the balance of this year is capped at just 1,800 units/month says otherwise, there is definitely a shortage of Hyundai Ioniq Electrics.

To be fair, we suppose it could be the windshield wipers that in short supply slowing things down? (all three versions of the Ioniq are built in the same Hyundai facility in Ulsan, South Korea). But those wipers seem to be available for Ioniq Hybrid sales - perhaps its just those chrome badges that say "electric" that is the hold up?

Source: Business Korea