Hyundai Motor and its affiliate Kia are stepping up focus on electric (EV) and hybrid vehicles as they target combined global sales growth of 3.2 percent to 7.51 million vehicles in 2026, following a narrowly missed target in 2025 amid a challenging electric vehicle market.
The South Korean automakers, which together rank third in global vehicle sales, delivered a combined 7.27 million vehicles in 2025, up 0.6 percent from 2024. Strong demand for hybrid vehicles in the United States helped offset slower electric vehicle sales after government subsidies ended in September.
Hybrids cushion EV slowdown in the United States
Hyundai, which generates about 40 percent of its revenue from the U.S. market, has benefited significantly from rising hybrid vehicle demand. The company said it achieved a fifth consecutive year of record retail sales in the United States in 2025, Reuters news report said.
Electrified vehicles accounted for 30 percent of Hyundai’s U.S. retail sales mix. Hybrid vehicle sales rose 36 percent, while electric vehicle sales increased 7 percent, reflecting a more cautious consumer shift toward full battery-electric models as incentives faded.
Kia also leaned on hybrids in the United States while strengthening its electric vehicle position in Europe through higher EV volumes, despite uncertainty caused by U.S. tariff policies and uneven global demand.
EV investments and new production facilities
For 2026, Hyundai said it will focus on optimizing profitability by launching new electrified models and expanding advanced production capabilities. Key projects include an EV-dedicated manufacturing plant in Ulsan, South Korea, and expanded production at its Pune facility in India to better align supply with regional demand trends.
Hyundai set its 2026 sales target at 4.16 million vehicles, slightly below its 2025 target of 4.17 million units but above its actual 2025 sales of 4.14 million vehicles. Analysts say the cautious outlook reflects expectations of a difficult global auto environment, particularly for electric vehicles.
Kia, by contrast, is seen as having more near-term growth potential. Analysts point to the updated Telluride model, which will be produced and sold locally in the United States, allowing Kia to avoid U.S. auto tariffs and improve competitiveness.
Competing with Toyota in hybrids
Industry analysts said expanding U.S.-based hybrid production will be critical for Hyundai and Kia as they seek to close the gap with Toyota, the dominant hybrid seller in the United States. Toyota controlled nearly 50 percent of the U.S. hybrid market as of November last year, while Hyundai Motor held about 13 percent, according to S and P Global data.
Producing more hybrid models locally would help Hyundai and Kia reduce costs, manage tariffs and respond more quickly to shifting consumer preferences as buyers remain cautious about fully electric vehicles.
Localized production strategy
In September, Hyundai said it aims to manufacture more than 80 percent of the vehicles it sells in the United States domestically by 2030, a move driven largely by evolving U.S. tariff policies and supply chain considerations.
BABURAJAN KIZHAKEDATH