Hyundai Motor (KRX:005380) Q3 2026 Earnings Call

0:00 Good afternoon and welcome to our 2026 CEO Investor Day. A special welcome to those watching online. We are very pleased to be hosting this year's CEO Investor Day here in our home market. Our commitment to this country has never been stronger, just like our economic impact here. Our founder, Shunju Jung, literally paved the way to today's Korea. We are very pleased to announce that we have a tentative agreement with our union. Thank you to our employees for their continued dedication throughout this process. Thank you for being here. We appreciate your interest and we welcome the hard questions. Last year, we told you what we were going to do.

0:46 Today, we want to give you a status report and show you the exciting road ahead. So, ladies and gentlemen, we are transitioning to a physical AI and technology company. We will be building, deploying, even financing robotics at scale. We are also advancing autonomous driving in-house and with partners. At the same time, we will never lose sight of delivering exceptional vehicles, beautifully designed cars that are highly quality, safe, and with features that customers appreciate. Our car business helps fund the future and we remain laser focused on delivering our plan.

1:31 I say all the time that it is a great time to be at Hyundai and it is great to be in this industry. I've also said it is one of the most challenging times I've ever experienced. We draw inspiration from our founder to create opportunities from challenges. In the first half, we sold 2 million vehicles and delivered 95.2 trillion won in revenue, up nearly 3% and record. Operating margin was 5.6%, and it improved by 0.3 points from the first quarter into the second. Hybrid sales reached 363,000 units, up 18%. And in the United States, we have now grown market share for five straight quarters, thanks to our team, dealers, and partners in the U.S.

2:26 Our market capitalization has averaged $105 trillion this year, 2.3 times last year's average. That is the market telling us it understands how we are transforming into a technology and physical AI company that also produces cars. So let's look at where our revenue is derived. North America is about a third of our volume. Korea, India, and Europe are each in the mid-teens. The rest sits across Central and South America, the Middle East and Africa, Asia Pacific and China. No single market carries this company. In a year like this one, that matters a lot.

3:12 In the United States, we set records in the first half with 509,000 wholesale units and 490,000 retail sales. Our hybrid mix rose three points. SUVs are now 62% of what we sell. Mix is where margin comes from and ours is moving the right way. Third in the world by volume, second in operating income for second year running. Profitability at this level is what enables us to invest in future products, future mobility, capacity expansion, and physical AI. We are very proud of the evolution of our product portfolio. This is recognition that you cannot buy. 13 top safety picks this year across eight Hyundai models and five Genesis models.

4:05 Consumer Reports has asked first for safety among premium brands, and second among mainstream. The Palisade is 2026 North American utility vehicle of the year. The Ioniq 6M is 2026 world performance car. And in India, the Venue took car of the year. Thanks to our engineering teams in Namyang for developing cars that not only meet or exceed our high expectations for quality and safety, but that have features that delight our customers. We know our competition isn't standing still, especially some of the newer OEMs. You will see how we are developing new cars that are ready to compete today and tomorrow.

4:51 A word on our engagement at the World Cup. It is a significant investment, but also significant return for us. This simply shows that we made the most out of our investment and had very high engagement including more than 250,000 test drives in 44 countries, which we know drives purchase consideration. We're currently maintaining guidance for 2026 operating margin between 6.3 and 7.3, and we are also very realistic about impact of external factors in the short term. I am happy to announce for the first time that we see a path to an operating margin above 9% Our CFO will talk more about how we are increasing our target by maximizing synergies and better utilizing our supply chain.

5:48 Our 2030 goals are intact. 5.55 million units of global sales by 2030 from 4.1 million. Electrified vehicles at 60% of the mix from 23%. and global market share of 6% from 4.7%. How do we get to 6.3 to 7.3% for the year from 5.6 today? The answer is our second half product offensive, which you will see in a few minutes. Those of you who know me know I think we can do always more, but this is our guidance today. Now, let's step back and look at the opportunities and some of the technology bets that we have been making.

6:38 Future mobility opportunities double our profit pool potential by 2035. The car business is still the largest piece. What changes is everything growing around it. Software and connectivity, after sales, financing, on-demand mobility, robotics, very few companies sit across all of that. This is the power of the group. Boston Dynamics and Robotics Lab, Motional and 42 Dot, AutoEver, Capital, Mobis, Globis, we do not have to buy our way into the next decade. We are already living in it. The strategy is simple to say and had to do. Maximize the profit of the car business today throughout product efficiency and localization.

7:29 then fund the future through the power of the group and our partnerships. SUVs, hybrids, performance and luxury pay for software, autonomy, physical AI, and robotics. Our business mix shifts across the decade. Now, let me show you the proof. The scale starts with platforms. Four of them carry almost everything we build, from the i10 to the IONIQ 9. And we share them with the group. That gives us the ability to be local without being expensive. The Exter for India. HB20 for Central and South America. Bayon for Europe. Santa Cruz for North America.

8:14 Grand Air for Korea. Ionic V for China. The same platforms customized for the taste in each market. Finding synergies where they make sense. and making sure that our brand differentiation is clear to customers. And we have the same discipline on powertrains, with the most complete portfolio in this industry. Gasoline engines from Kappa through Lambda, hybrids in both front and rear wheel drive layouts, battery EVs from LFP through high performance nickel chemistry, fuel cells, and now extended range EVs for all ERVs which have so much potential and which I will come back to.

9:00 This is how we maintain flexibility. When demand shifts and it has a great deal, IRA, conflict in the Middle East, we already have the product. I always tell the team, it is simple. Give customers what they want. The lifeblood of this industry is product. I am happy to announce for the first time that between now and 2030, we will have more than 100 product launches around the world. That is 100 launches for new or refreshed vehicles for Hyundai and Genesis over the next four years. 58 in North America and 22 of those at Genesis.

9:48 I'm excited to also announce for the first time that we will have 49 launches here in our home market of Korea. We will have 41 launches in Europe. We've spoken about our ambitious plans in India and China, which you will see here as well. There are more than 18 new products and segments in which we don't compete today. This is very significant. And our first extended range EVs start production in early 2027. This is the most ambitious product offensive in our history. Before we talk about 2030, look at the next eight months for Hyundai. The all-new Elantra, which is the Avante in Korea.

10:36 The brand-new Ioniq 3. The all-new Tucson and Tucson Hybrid. The first-ever Santa Fe E-REV, a brand-new SUV EV for India. An all-new Global B SUV and an all-new B SUV for Euro. Seven Hyundai launches after a slower first half. The Tucson is the seventh best-selling vehicle in the world with more than 10 million in global sales. The all-new Tucson and Tucson Hybrid arrive in the fourth quarter. And I want you to look carefully at what the Hybrid does against the gasoline version. 245 horsepower, 27% more power, and 43% more torque, faster to 100 kilometers an hour, and 43% better fuel economy at the same time. The all-new Tucson Hybrid offers the best combination of performance and efficiency.

11:39 Extended-range EVs arrive in early 2027, and we build them on multiple continents. The Santa Fe EREV provides more than 600 miles of range, about 1.6 times what the gasoline Santa Fe delivers, using a new high performance battery and a two motor system that drives and accelerates like an EV. We already have prototypes of the new Santa Fe EREV on the line at our plant in Alabama. For a customer who wants the EV experience without changing how they refuel, we now have an answer, and it's made in America. This is a good way to dimension future product opportunities and portfolio wide space.

12:28 There are 26 million units a year in segments where we have little or no coverage. That is 29% of the total industry. Pickups, light commercial vehicles, and large SUVs are the biggest gaps in the markets that pay the best. 100 new launches, 18 new products and segments. You have seen where we are going with Boulder, with Ionic Earth, and with Crater. Concepts are easy. What makes this different is that the body of frame architecture behind them is funded and in development. More than half of our growth from 4.1 million to 5.55 million comes from products we do not sell today. Body on frame vehicles, a large van, SUVs and MPVs. We are simply taking what we already build to places where we currently do not sell.

13:31 The Exter and the Verna both made in India. going to new markets on the back of an ecosystem we have spent 30 years building. And the rest is organic share growth offset by portfolio rationalization that we're doing deliberately. Look at how we shape of this company, how we've changed. In 2020, more of our sales came from Korea and North America. By 2030, you can see a much more diversified regional sales map. Diversification of sales follows growth and opportunity. In this environment, it is also a hedge. With new vehicles and new launches, we need more production.

14:18 So we are adding 1.27 million units of capacity by 2030. We are adding 500,000 capacity in North America, 320,000 in India, 250,000 across our CKD sites, including Saudi Arabia, Vietnam, and Algeria. 200,000 in Korea, including in our all-new EV plant in Unsan. As I have said many times, we build what we sell. That was true before tariffs, and it will be true long after. Localization is the name of the game. North America is where our hybrid story became a scale story. We have sold more than a million hybrids there.

15:05 It started in 2011 with the Sonata hybrid at 1% of our mix. This year, it is 25% with the Palisade hybrid. And we'll continue with the all-new Tucson hybrid and the first hybrid Genesis, the GV80. By 2030, we will offer more than 10 hybrid models and hybrids will be half of what we sell in the region. Built in Alabama and at the Meta plant in Georgia. As I mentioned, our first extended range EV will be introduced in North America from the first half of 2027. Our supply chain is of course an essential part of our production ecosystem and another important aspect of localization.

15:51 We will increase past localization on the vehicles we build in the United States from 60% today to 80% by 2030. We have added more than 275 local suppliers since 2024. One supplier at a time and one part at a time. Our mission has always been to bring value to our customers and offer affordable options. The Elantra SE brings people into our brand at under $23,000. 64% of those buyers, when they come back, come back for a Tucson or something above it. More than half of our sales mix is now trims carrying a 20% premium or better. Limited, calligraphy, and XRT Pro. And we do it spending 13% less on incentive and the industry average, while closing 77% of the transaction price gap to our competitors. We are not buying that volume.

16:56 Customers are choosing to pay more because the product is worth it. Let's talk about Europe, one of the most competitive regions on the planet. We now cover 85% of that market with an electrified portfolio, and we are adding five new electrified models across SUVs and light commercial vehicles. We cover 100% of the B and C segments, which together are more than 60% of everything sold in Europe. This is full coverage where the volume sits. Our EV volume in Europe was 116,000 units last year, and it goes past 420,000. Every EV credit we earn protects the ICE and hybrid business alongside it. The EV line does not stand alone in the market. We have 580,000 units of European capacity with room to grow. And more than half of it will be battery electric, including the IONIQ 3.

18:00 Local content is 85% in Czechia and 70% in Turkey. And our next generation of EVs takes 30% out of battery cost per kilowatt hour. Our sales and service footprint is more than 2,250 dealer outlets and service centers and 550 fleet business centers. Quality, reliability, and service are the most important topics for fleet customers so we service them what they needed. The Ioniq 3 goes on sale this month, built in Turkey, nearly 500 kilometers of range at 61 kilowatt hour battery and 29 minutes to charge from 10 to 80%. It is also the first vehicle in Europe with GLEOS Connect and our GLEO voice assistant.

18:54 Now to India, one of our most important markets and where we also trade publicly. SUVs are 70% of what we sell there today. On that way, all the way to the 80% by 2030, the Creta has been the best selling midsize SUV in that market for 10 consecutive years. A brand new compact SUV EV is coming, designed and localized for India. And electrified vehicles reach half of our mix there by 2030, against our 30% for the market as a whole. The opportunities in rural India are massive. Rural rises to 30% of our sales by 2030. That is often a family's first car ever, and they are choosing us.

19:46 We reach 85% district coverage by 2030, with more than 1,600 service touchpoints today and 79% customer retention. Also, this is important, and the capital launches there this year, so those customers have better ways to finance. India is now our second largest production base anywhere outside Korea. Our new Pune plant opened this year, taking us toward 1.1 million units of domestic capacity. Localized content goes from 84% today to more than 90% by 2030, with more than 1,400 local suppliers, three-quarters of them India-based, and more than 1,300 local engineers.

20:35 More than 60% of our vendors are clustered around Chennai. We've been in India for 30 years, learning what customers want and how to deliver in the most efficient way possible. India is also a factory for the world. Our cost position there is more than 15% better than our global baseline. Four million vehicles have been exported to more than 70 destinations. Exports rise to as much as 30% of what we build there by 2030, with half of it going to the Middle East and Africa, and 40% to Central and South America. The I-10 venue and Exeter are built there for the world and nowhere else.

21:26 Korea is the heart of our manufacturing operation. Ulsan is the largest automotive manufacturing operation in the world. 1.8 million units of capacity, more than 60% of it exported. 27,000 manufacturing employees and more than 4,700 local suppliers. 22 models coming down mixed powertrain lines. We are so grateful for the men and women at our facilities that build our vehicles with such precision and care. Later in the year, we will open the Ulsan EV Plant, and the first car down the line is the Genesis GV90. It is a software-defined factory with 108 advanced manufacturing tools.

22:17 AI-enabled quality control and a manufacturing AI agent working alongside our people. And from 2027, we modernize Ulsan plants 1 and 4. We continue to invest in our modern plants. Hyundai Motor Group is investing 125 trillion won in Korea, the largest domestic investment in our history. 50.5 trillion goes into future business across AI, software-defined vehicles, electrification, robotics, and hydrogen, including 9 trillion for a dedicated hub. Another 38.5 trillion into research and development, and 36.2 trillion into our production facilities and the global business center.

23:09 Korea is our home, spiritually and physically. Sometimes people ask me if we are a Korean company that's global or a global company that's Korean. The answer is yes. Our commitment to this country, to creating high-paying jobs and investments that benefit the economy and giving back is literally part of our DNA. No matter how much we grow internationally, Hyundai's success is Korea's success and Korea's success is Hyundai's success. Now China, where we are working to turn around the business and using all the levers of the group. After volume and profit declines, we are implementing a new plan and tripling down on the world's largest and most competitive market.

24:02 Profit is stabilizing now, and we are on the way back to more than 500,000 units by 2030. The plan has three parts. We launch with a unique brand. modernized the network to 484 dealers by 2030, moving into Tier 1 and Tier 2 cities with lighter retail formats, and built with the best Chinese technology partners, in China, for China. IONIQ D launched there earlier this year. More than 600 kilometers of range, a 27-inch panoramic display, and AI assistant and driver assistance tuned for Chinese roads, which are unlike anywhere else. Developed in China, built in China.

24:55 AB SUV and AC SUV follow in 2027, both offered as battery electric and extended range. Then a second phase with premium new energy vehicles on a full stack software platform. We are tripling down. We have the scale, the engineering, the network, and the power of the group to compete with anyone, anywhere, including in China. The Middle East and Africa is our next frontier. The middle and upper class there passes 700 million people by 2035, and industry volume goes past 5 million units. We are already the number two brand with 8.4 market share across more than 50 countries with eight assembly plants and double-digit margins.

25:50 Our new Saudi Arabia plant opens in December and our facility in Algeria in 2027. Let me talk about performance because it is a profitable business, not just an emotional one. Hyundai N reaches about 30% of the performance market today. By 2030, we take that past 60%. We will have more than seven N variants across more than 40 markets, targeting 100,000 sales a year. And we are adding something between N and N line. A new volume high performance variant carrying over powertrain and parts from N. So a customer who wants that feeling every day on the way to work can have it without buying a truck car.

26:41 N sold 20,000 units last year. N-Line sold 161,000. This sits between them and it is where the volume is. Five N models on sale today and 12 N-Line products. two world performance car winners in a row, the Ioniq 5N and the Ioniq 6N, and the Elantra N carving its own racing line. We earned that credibility before we put it in showrooms, and it is now spreading across the whole Hyundai lineup. Last week, we unveiled the brand new Genesis EV90 for the first time. I said, Korea has K-pop, K-beauty, K-Drama, and now with our new flagship luxury SUV, we have K-Luxury.

27:33 Genesis reached a million cumulative sales in seven years and eight months. No luxury automotive brand has ever done it faster. And we are now in more than 24 markets. Ten years ago, Genesis was a promise. Since then, we've operated like a startup that has the resources of a well-funded parent company. This year alone, we have introduced the X Scorpio Concept, the G90 Windback, our first dedicated dealerships in Europe and the UK, the Magma GT and GT3 Concepts, our debut in the World Endurance Championship, and our first Le Mans, racing which is not just about marketing.

28:21 Win on Sunday, sell on Monday. You cannot hide anything at Le Mans. and what we're learning as part of the World Endurance Circuit ends up in the cars our customers drive. Ladies and gentlemen, please welcome for the first time ever the Genesis GV80 Hybrid. We brought a new GV80 Hybrid to this event especially for you. The all-new GV80 Hybrid launches next month, the first hybrid Genesis has ever built. 352 horsepower, roughly 25% better on both efficiency and power, with a liquid-cooled hybrid battery. It drives like an EV, and it never asks the customer to plan their day around a charger.

29:13 Ten years of Genesis, and it still looks like nothing else in the segment. A Genesis extended-range EV follows in early 2027, with more than 640 miles of range. And this is the Magma GT concept, the first pure sports car in the history of Genesis unveiled at Le Mans. A brand that wants to be taken seriously in luxury has to prove something on a racetrack first. Luxury is where the profit is, and it is growing. The global luxury market goes past 3 million units by 2031 at 10% compound growth. led by the United States, Europe, and China.

30:00 And within luxury vehicles, 25% of buyers express excitement towards electrified super SUVs, more than any segment by a wide margin. We see a lot of excitement for super SUVs, and we certainly show a lot of enthusiasm for our brand new GV90 last week in San Francisco. Have a look.

30:36 See how much has gone of life Your present leaves you fever-tied Sometimes one learns all you need Recovery The stars shine around me Motor Coos

32:43 The Genesis GV90, our new luxury flagship. The Neolune arch gate coach doors with hidden B-pillars and our reductive design. Swilling seats, adaptive UX and OLED cinematics display and the world's first roof airbag. Nobody has done that before. The GV90 is the ultimate expression of the brand and our sun meme philosophy. The new GV90 rounds out our existing lineup. Seven models or 15 counting derivatives across SUVs, hybrids and performance. Five top safety peak plus awards. First for safety among premium brands. That is not a coincidence.

33:33 It is intentional. We build this brand where our customers already are. The Genesis Invitational and the Scottish Open both extended to 2013. And we build the places to receive these cars. More than 270 retail locations globally by 2030. 50% more than today. Suji and the Genesis Lounge in Seoul. Almere in the Netherlands. Genesis Designs, California. And finally, Sydney. This year alone, Genesis launched in Italy, France, the Netherlands, Tunisia, and Morocco, with Spain in the fourth quarter. Austria, Denmark, Poland, and Portugal followed in 2027.

34:21 Then, India and Asia-Pacific. More than 40 markets and 350,000 sales by 2030. Now, let's shift from luxury to future mobility. Autonomous driving has the potential to increase safety and convenience exponentially, and it also has incredible profit potential. Our AV foundry business is enabling a scalable robot taxi development, starting with an AV-ready Ioniq 5. Our approach to autonomy includes in-house development with Motional and 42DOT, as well as partnerships. Motional is partnering with Uber to make driverless commercial rides available later this year on the Uber app. I also want to give an update on our Waymo partnership. We have completed nine months of public road testing so far.

35:19 Deliveries of AV-ready Ioni5 to Waymo will begin later this year. Fully built in the United States with a domestic supply chain. I am excited to announce that we are bringing this Wemo partnership to international markets. We are also entering the electric three-wheeler segment with TBS Motor Company, designed by Hyundai, co-developed and produced by TBS. Concepts to prototype in under 24 months with very little capital from us. It opens a mass volume segment across Asia and Africa that we could not have reached alone. Our partnership with Amazon continues to expand as well.

36:04 Amazon Autos now covers 80% of the US market through dealer enrollment and 78% of those buyers are new to Hyundai. I'm happy to announce that we are expanding Amazon Autos to international markets as early as 2027. Alexa extends across our entire lineup with Genesis to follow. Together with AWS, we are scaling our AI work across software, autonomy, and robotics. And finally, we are exploring collaboration across optimized logistics, alternative energy, and new customer experiences. As our executive chair said last week, we are becoming a physical AI company.

36:52 We are moving faster than our competitors to produce and deploy robotics at scale. Ground zero for commercialization of robotics is our newly opened Boston Dynamics Robot Metaplant Application Center at HMGMA. It exists to collect data and validate robots against real factory conditions before they ever touch a production line. By the end of this year, we expand the site more than tenfold. Deployment of the meta plant in Georgia follows at a scale in 2028 and global robotics deployment from 2030. Let me be clear about our utilization of robots. Robots are in service of humans. They do the work that is difficult and repetitive.

37:43 Ultimately, this will improve safety, quality and efficiency in our operations. Robots are not replacing humans. We are creating new categories of jobs like robot maintenance, all while maximizing human potential. And here is what makes this different from a research project. We are investing in robotics manufacturing facility in the United States, starting production in 2028 with 30,000 units of annual capacity. It will be the world's first large-scale commercial robotics manufacturing facility. The first 25,000 commercial units are already confirmed, starting with the meta-plant, and we are utilizing additional industrial and logistics partners.

38:32 Let me give you some dimensions of the opportunity. Boston Dynamics is now part of the group. We are building spot and stretch robots, and soon we'll be mass-producing Atlas humanoid robots. We have existing potential distribution for selling robots through our dealer partners. And Henry Capital is exploring the feasibility to finance sales of robots. Development, production, distribution, sales, and finance for robotics. Ladies and gentlemen, this is the power of the group. All of that fits inside the largest commitment we have ever made in America. $26 billion between 2025 and 2028. and 25,000 new direct jobs. A new low-carbon steel mill in Louisiana, $5.8 billion, and 2.7 million tons of capacity supporting 5,400 jobs directly and indirectly.

39:32 U.S. robotics production is starting in 2028 with 30,000 units of annual capacity. We will have more to say about the site soon. As was reported last week, we need more production capacity. We are actively looking for opportunities. The decision is not yet final. What is final is the direction, because we have committed to building more than 80% of what we sell in America in that country by 2030. And we cannot do that without more capacity. We began as a Korean company that is global. In the United States, with thousands of people working with us and our ecosystem from Alabama and Georgia to Michigan and California, we have become a part of the fabric of America.

40:22 Now, the data underneath all of this is what makes it work, and nobody understands that better than my colleague. Please welcome Minoo Park, head of our Advanced Vehicle Platform Division. Hello, everyone. I'm Minho Park, head of AVP division at Hyundai Motor Group and CEO of 42DOT. Today, I'd like to share the new competitive strength HMG is building for the AI era. Let us first consider the changes we are already experiencing. You may remember when 첫 GPT first emerged.

41:10 It was remarkably natural in conversation, but at times it also gave unexpected answers. But today, ChitGPT delivers an entirely different level of experience, more accurate, faster, and far better at understanding context. So, what has changed? Advances in AI models and computing were important. But more importantly, real-world usage was turned into data and fed back into AI improvement. YouTube works in much the same way. It learns what we watch and what we skip, then recommends more relevant content. The common thread is simple. The more it's used, the better it becomes. This is the data flywheel.

41:55 The basis of competition is now changing as well. Who can capture more real-world experience, identify meaningful data within it, connect it more quickly to AI learning, and turn it into better products? This will be the new basis of competition. And the automotive industry is no exception. Vehicles, too, must evolve from products whose capabilities are fixed at the delivery into products that learn and improve through use. In the past, vehicle performance, manufacturing scale, and quality were at the center of competitiveness. Going forward, beyond these fundamental factors, what will matter is how quickly companies can accumulate data and connect it to AI learning and better services.

42:44 Global leaders are also looking beyond individual vehicles or the mass production of specific technologies. They're focused on building data flywheels. that continuously accumulate data, learn from it, and improve performance. Hyundai Motor Group's transition to SDVs is ultimately about securing data-driven competitiveness. To this end, over the past years, Hyundai Motor Group has built the core technologies and data infrastructure needed for this transition. Starting this year, we're beginning to collect data from production vehicles in real-world road conditions. We're now entering the next phase, using that data to improve AI models and services. Today, I will first discuss the technology foundation that enables the data flywheel. I will then explain how data is collected and translated into AI improvements in in-vehicle experience and AD.

43:41 Finally, I will explain how Hyundai Motor Group's global sales skill in AI infrastructure will expand this system. To make a data fly work, fly will work, we need a technology foundation that can collect data, train on it, and deploy improvements back to vehicles and services. In other words, everything from vehicle architecture to data, AI, validation, and OTA must be connected as one system. Sandemur Group has focused on building this foundation over the past years. First, we developed CODA, our next-generation E&E architecture to transition vehicle computing and control to an STB-based structure. This enables us to continuously improve software and functions through OTA updates after delivery. For the in-vehicle experience, we developed Clio's Connect, our next-generation infotainment system, and Clio AI, an agentic AI for vehicles.

44:39 We've begun deploying them in production vehicles. In autonomous driving AD, we are developing Etria AI, our proprietary end-to-end autonomous driving model. To support this, we're also standardizing AD sensor systems across the group. and building a foundation to collect and use driving data in an integrated way. Together, these technologies and systems form the foundation of the data flywheel. Data collection, learning, improving, and deployment. Let me now explain how data collected from actual cars leads to AI improvement. The starting point for in-vehicle AI is the customer's real-world experience. Starting with a new brancher, Plus Connect and Square AI are being deployed in production vehicles. As customers interact with their vehicles, data on vehicle use patterns, ad trends, and the context in which AI services are used is beginning to accumulate.

45:37 Viewed data in anonymized form with customer consent. Agency AI for vehicles is different from general AI services. To provide the functions customers want without compromising safety, it must understand the vehicle's condition, driving situation, passenger intents, safety requirements, and regulations as a whole. That level of understanding can only be achieved as diverse data accumulates over time. It begins with customer behavior data showing which functions are used and how often. When this is combined with local data like language, regional usage patterns, and lifestyles, the AI can better understand local content. It can also improve service quality in each market and support the growth of local app ecosystem. When vehicle data like driving speed, vehicle control status and sensor information is added, it becomes even more valuable by connecting customer behavior with real-world context. With this data, we can see which features customers use most, where they face inconvenience, and even why they use certain functions in particular situations.

46:51 This is how we gain a holistic understanding of vehicle conditions, driving situations, passenger intent, and safety. HMG continuously analyzes key performance metrics generated as customers use GLEO AI, which enables us to identify technical improvements that deliver faster and more accurate responses. Customer needs and improvement opportunities identified from data, either directly or indirectly, are reflected in enhancements to GLEO AI and the development of new GLEO's Connect features in compliance with AI ethics guidelines. The results are then deployed back to vehicles through OTA. As this improved agentic AI is delivered back to customers, greater use generates more data.

47:40 That data improves AI and better services drive further customer use. The purchase cycle is now beginning to operate in a mass production environment. In autonomous driving, we're also building a system that collects data and learns through the same purchase cycle. Autonomous driving performance depends on how effectively we collect and learn from rare but challenging S cases. Pandemoro Group is therefore focused on securing this type of data. First, based on the NVIDIA ecosystem, we are standardizing sensor systems across the group, which allows us to integrate and use data from HMC, KIA, 42DOT, and MotionR under a consistent framework.

48:27 Building on this foundation we have established a data union with global partners like NVIDIA enabling us to use large scale driving data accumulated through diverse autonomous driving operations. In addition, Atria AI will be deployed in the Guangzhou AD pilot program that will begin later this year, which will allow us to directly collect critical S-case data for further model improvement. Then in 2028, through our partnership with NVIDIA, we will introduce Level 2 Plus autonomous driving technology in our first production STB and begin collecting driving data at scale. will analyze all of this driving data through a dashboard. We will review recent issues and quantitative metrics to determine where performance improvements are needed.

49:20 For example, we track a range of metrics like system stability across various scenarios and automated parking performance to monitor ongoing improvements. In particular, when critical issues or unusual cases are identified during the evaluation process, use the data collected to enhance Estria AI and then verify how much the quantitative indicators have improved. The improved Etria AI will be rolled out to customers, enabling more people to enjoy safer driving experiences. Ultimately, we aim to expand Etria AI across production vehicles from 2029 onwards and build a full AD lineup from L2 Plus to L4.

50:08 So far, I've described a structure that captures data, identifies meaningful data, and translates that data into better AI. The important question now is how far we can scale it. When these technologies are integrated into a full-stack SDV product, a software and AI-centric technology stack, all expand across products, fleets, and compute infrastructure, creating new demand for computing capacity. This requires large-scale storage and computing infrastructure. This is where the flywheel begins to scale. Shandamuru Group's greatest strength in scaling this structure is our global sales volume and business network.

50:55 We sell more than 7 million vehicles annually and operate in over 119 countries worldwide. As STB architecture and standardized sensor systems are deployed in more production vehicles, real-world experience and data from diverse countries and road conditions will grow rapidly. But the key is not simply selling more cars. What matters is how quickly we increase the share of vehicles that collect and use data through the same structure. Accordingly, starting in 2028, HMG aims to apply standardized sensor systems and AI computing platforms to mass-produce vehicles and continue extending their adoption.

51:41 Through this, by around 2023, we expect to surpass our competitors in cumulative data volumes. Eon scale we also expect to build a differentiated competitive advantage in the quality and diversity of our data. As data begins to grow, the infrastructure to process it and train on it must expand as well. Today, we flexibly secure the computing resources we need through both our KaSeon Data Center in Korea and Xtutter Cloud Partnership. Then from 2029, as AD data begins to grow sharply, we plan to bring online a 100 megawatt AI data center in Saemangeum capable of holding more than 50,000 DPUs. This is about more than scale.

52:29 It represents the completion of an independent infrastructure that can process and train on vast amounts of globally collected data in-house without relying on external crowds, while internalizing the full process data collection validation deployment. So, Hyundai Motor Group will organically connect data accumulated through its global manufacturing system in-house AI and the infrastructure that supports it, strengthening our long-term data-driven competitiveness. The competitiveness of the future mobility industry will be determined not by any single technology, but by the ability to collect data, learn from it, and translate it into better customer experiences.

53:14 Tandem World Group is steadily building a data collection system based on our global fleet skills, in-house AI models, and the robust infrastructure to support them. Throughout this process, the values we consider most important are utility and reliability. We will use data to understand what customers truly need while delivering experiences that are safe and reliable enough for them to use with confidence. These capabilities will not be limited to vehicles. Over time, they can provide a foundation for manufacturing, robotics, and beyond. Of course, building a data-fliable and internalizing AI capabilities cannot be achieved overnight. It's a journey that requires cooperation with governments, local authorities, and partners across industries, as well as the recruitment of outstanding talent. Guided by these principles, we will continue to advance our capabilities in data, AI, and infrastructure.

54:18 Thank you. Next, Sanghwan Kim, EVP Sanghwan Kim, Head of Electrification Energy Solutions Tech Unit, will speak about our better technology and strategy.

54:36 Good afternoon. I'm Sanghwan Kim of Hyundai Motor Company. To offer new customer experience and safety, which are the utmost value, Hyundai Motor has always strived to internalize core technologies. In our own steadfast ways, innovations were achieved, from the independent development of our hybrid systems to EV-dedicated eGMP platform now running on roads around the world. Hyundai's drive towards electrification and mobility leadership has consistently advanced towards the future. And at the center of this transition to electrification is battery. And the key to deciding the future of ability of competitiveness is also the battery. Last year at CEO Investor Day, I've explained about Hyundai Motors' electrification technology and our acceleration strategy. Today, I would like to share the results of such efforts, how our proprietary technologies offer differentiated customer experience and next-level guarantee safety in the EV era. Please allow me to introduce our battery technology excellence.

55:43 Batteries are now no longer a power source that just stores energy. Hyundai Motor's battery innovation goal is very clear. It's to create a perfect customer experience and put safety first. a harmonious fusion of these two core values. Our batteries are designed to have cell, system, and BMS meshed together perfectly as a single intelligence organism, which raises the fundamental standard of EVs. Innovation in customer experience includes performance, price, and durability, a perfect balance across these three dimensions. Of course, marketability is decided by its driving range and charging speed, which we offer as convenience mobility experience to customers.

56:35 With innovative, optimized design, we secure price competitiveness that satisfies everyone. Furthermore, over the long span of vehicle ownership, the battery performance is maintained. thanks to our long-life technology protecting the customer's asset value. The completion of such overwhelming performance and economic value can only show its true worth when the highest-safe technology is secured, protecting our customers. Hyundai Motor has secured the ultimate thermal propagation prevention technology, Thermal Runaway Protection, TRP in short, applicable to every battery form factor and chemistry. Through this, we wish to earn customers' trust being a safe EV. By fundamental innovation in technology that satisfies uncompromised performance, durability, and safety, we intend to present a new standard unprecedented in the world.

57:28 The driving range, power output, and charging speed that EV customers experience all begin with the performance of the battery cell. To extend the driving range, We must pack as much energy as possible into a small space, and to achieve high energy efficiency, we need to reduce battery weight. This requires high energy density. However, conventional batteries have limitations. Increasing energy density resulted in reduced power output and slower charging speeds, while boosting charging speed and output compromised energy density. Furthermore, hard performance EVs previously had no choice but to carry larger battery packs simply to increase power output. Based on design capabilities built and internalized over a long period, Hyundai Motor has successfully developed a proprietary high-performance battery cell that simultaneously achieves both high energy density and high power output.

58:23 This time, the in-house designed battery cell maintains the same energy density As the battery is currently used in EGMP platform EVs, it delivers double the power output, reduces charging time by over 40%, and significantly lowers internal resistance, thereby improving cooling performance. You can easily understand this differentiated performance from the diagram on the right. Compared to the fast-charging LFP batteries with under 10-minute charging time recently announced by competitors, and the motor's independently developed battery maintains high energy density and power output. This delivers the key advantages of securing long driving ranges and generating high output even with its smaller battery packs. The compact yet powerful battery, independently designed by Hyundai Motor, which I just explained, will be installed in our EREV launching next year.

59:11 EREV, short for Extended Range EV, carries a smaller battery compared to standard EVs and generates additional electricity via an internal engine, enabling a driving range of over 900 km. Generally, EV power output is proportional to the number and capacity of battery cells, making it difficult for EREVs which carry fewer batteries to achieve equivalent performance level. However, the performance battery packed in Hyundai's EREV achieves equivalent power output and driving performances to IONIQ 5 EV, even with less than 50% of battery capacity. In this way, through our accumulated experience in R&D capabilities, Hyundai Motor Company's battery solution dramatically reduces vehicle weight to maximize energy efficiency, secures more spacious interior view, and fully delivers the quiet yet dynamic driving experience unique to electric vehicles directly for customers.

1:00:06 Recently, a vast majority of customers considering an EV place high priority on price. To accelerate EV mass adoption and offer a wider range of choices to customers, Fundamotor has previously utilized two battery chemistry types, high nickel NCP and LFP, strategically introducing mid-nickel NCP batteries into our lineup, offering both optimum performance and outstanding cost efficiency. Our mid-nickel battery serves as a critical solution for securing price competitiveness. It offers a price-friendly coastal SP while delivering high energy density. In other words, within the same battery pack volume, a mid-nickel battery can load 100% energy capacity, whereas LFP can only load approximately 70%.

1:00:57 Compared to the fourth-generation high-nickel MCM battery currently used in IONIQ 5, it is 30% lower in cost, and in Europe, The price gap with LFP is within 10%. Therefore, to meet diverse customer needs moving forward, we will offer a tailor-made battery selection, high nickel performance batteries for customers seeking high performance and high charging, mid-nickel batteries for value-conscious customers, and LFP batteries for entry-level segments and regions requiring ultra-low pricing. The mass production vehicle integration of the mid-nickel battery will begin in the first half of next year, and from 2028 onwards, it will be widely adopted across volume models, playing a key role in securing the cost competitiveness of our EREDs.

1:01:46 Hyundai Motor is active pursuing the development of next-generation battery technologies, including all-solid-state batteries, alongside various chemistry-based solutions. This will serve as a core driving force to further strengthen electrification mobility competitiveness moving forward. The field durability of Hyundai Motor's battery developed in this manner is clearly proven by real-world driving data from customers across the globe. Analyzing data from an IONIQ 5 that drove over 400,000 km in Korea reveals that its battery's state of health remains at an average of 95% compared to a brand-new cell. Furthermore, according to a survey by a European automotive media outlet in 2006, analyzing the residual lifespan of 34 EEG models aged in two years, our group ranked highest with 99 and 98%.

1:02:34 Not resting on this world class durability, we aim to advance the technology to the next level. Accordingly, starting in 2008, we will apply various new BMS technologies currently under development by Hyundai to improve battery lifespan durability by more than 20%. And for consistently differentiated lifestyles, starting with GB90, we will put an application. And our cloud-connected EMS will constantly evolve based on vehicle-based data. The outstanding performance, reasonable cost efficiency, and unwavering durability I described earlier at the center of all these remarkable technological achievements lies Hyundai Motor's highest priority in access values.

1:03:23 which is customer safety. As shown in the video, when an abnormal behavior occurs in a single battery cell causing a short circuit, Thermal propagation typically spreads to adjacent cells. The thermal runaway protection technology developed by Hyundai Motor, which I am introducing today, ensures that even if a short circuit occurs in one cell, the heat will not propagate to neighboring cells. Secured through over 60 patents and specialized know-how, Hyundai's proprietary TRP technology prevents thermal runaway across all cell form factors, whether prismatic or pouched. Designed to allow customers to use EVs with total peace of mind, this innovative safety technology operates meticulously in step-by-step stages.

1:04:12 First, advanced BMS launches self-status in real-time and precisely diagnoses any anomalies. If abnormal safety behavior occurs, the system detects it and immediately notifies the customers to enable proactive measures. Even if an unpredictable physical short circuit occurs and escalates into an event, The TRP-applied battery controls high-temperature heat and smoke dispersion, fundamentally blocking thermal propagation to adjacent cells and concludes the event's safety by discharging smoke for a short period. And this video demonstrates this knowledge in actual operation. As you can see, even though the cell experiences a short circuit and catches fire internally, the fire does not propagate to adjacent cells. Its safety concludes after releasing smoke to the outside.

1:04:57 Hyundai's proprietary TRP technology was achieved through over hundreds of rigorous tests and design refinements by our researchers. Uncompromising when it comes to our customer safety, we established a safety technology test building within Rameon R&D in 2023, refining a perfection of a thermal runaway protection technology through thorough process validation under real-world driving conditions. This unrivaled thermal runaway protection technology realized countless trials and iterations will firstly apply to Hyundai Motor's top-tier luxury flagship model, the Genesis GV90, announced last week. To maximize safety value for our customers, we will rapidly expand this crucial and innovative protective feature across all vehicle classes and lineups. by continuing to secure battery-safe technology solutions across our entire vehicle lineup, Hyundai Motor will establish top-tier safety leadership in the global EV market.

1:06:00 Today, we share Hyundai Motor's current battery technologies, our upcoming roadmap strategy, and our future vision. From securing cost efficiency to drive EV democratization to market-leading unique performance, and top-tier safety features that protect customers under any circumstances, Hyundai Motor's battery technology is continuously advancing toward the ultimate mobility era. The ultimate destination of all these remarkable technological achievements is people and the innovative experience that our customers will enjoy. Our innovation will not remain confined to current battery electric vehicles, but will boldly extend into all areas advancing human ability, including upcoming robotics and diverse future mobility solutions. Thank you very much for your time and attention.

1:06:50 Next, I'd like to invite the Executive Vice President, Scott Lee, Head of Finance Division, to present on our mid- to long-term profitability targets and shareholder return strategy. Hello, everyone. I'm Scott Lee, EVP and head of the finance division. How did you find the earlier presentations by the CEO and other management members? I hope they provided a clear understanding of our strategy. Let me now turn to the financial presentation, beginning with our long-term profitability targets. This year, we're operating amid exceptional uncertainty, including the war in Iran and supplier-related issues. It's a year that demands agile responses to unpredictable challenges.

1:07:37 At the same time, we face a difficult business environment marked by competition and persistent geopolitical risks. Even so, we are delivering meaningful results. In the U.S. and other global markets, hybrid sales have exceeded the targets, reducing a record sale of total sales. For the remainder of the year, we will optimize our mix on the back of strong hybrid momentum and maximize the new product cycle for Avante, Tucson, and GV80 hybrids. Through these efforts, we remain focused on delivering the OP operating margin guidance of 6.3% to 7.3% announced at the start of the year. That said, Given the unpredictable macro environment and heightened business uncertainty, Coal continued to communicate closely with the market on our future profitability direction.

1:08:30 And we now turn to our long-term operating margin target. At last year's CEO Investor Day, considering changes including tariffs, we presented a 2030 OP target of 8 to 9%. Today, supported by strong hybrid momentum driven by our product competitiveness, as well as our company-wide cost reduction roadmap, we're raising our 2030 OP target to 9% or higher. As announced earlier, we're maintaining our target for electrified vehicles to account for 60% of total sales by 2030. But reflecting global demand and the competition, we have recalibrated our partners. By expanding the share of hybrids, which generate above-average margins, we're not only raising our OP target, but also increasing total consolidated OP by 11%.

1:09:25 A strengthened hybrid line-up is central to this improvement. Last year, we launched the Palisade hybrid, the first model equipped with our next-generation hybrid system. This year, as you can see beside the stage, we will begin with the GB80 hybrid and expand our premium hybrid line-up under the Genesis brand. From there, we will roll out our next generation hybrid system in full, building a hybrid lineup across all segments from affordable hybrids in smaller segments to premium hybrids in larger segments. This will enable us to pursue both volume growth and higher value growth while continuously improving hybrids profitably. In federal, we will pursue company-wide cost reduction efforts including material cost reduction and next generation technologies to maximize profitability and achieve an OP margin of 9% or higher by 2030. Let me now turn to our cost reduction roadmap, the second key driver of profitability improvement.

1:10:30 To respond with resilience to changes in the internal and external business environment, including tariffs, and intensifying competition and to secure future competitiveness, we've been pursuing a fundamental transformation of our cost structure since the beginning under strong company-wide leadership. Going beyond our ongoing cost reduction activities, it's a company-wide strategic cost roadmap built through the participation of collaboration of every function. Of course, quality remains a core thing on which we will never compromise. We will transform our cost structure comprehensively to achieve our strategic cost reduction targets without sacrificing quality. First, we will drive cost innovation across the full vehicle lifecycle. In the past, cost reduction was focused on the new vehicle development stage going beyond all optimized costs.

1:11:24 across the entire lifecycle from development to post-launch, as development will maximize commonization across manufacturing and design to secure cost competitiveness from the outset. For vehicles already in production, we will identify new cost innovation opportunities and roll out those improvements globally, improving the profitability of existing models. We will improve efficiency in production and service processes, establishing a lifecycle-wide cost management system. Beyond production process optimization, we will enhance manufacturing efficiency through strategic equipment upgrades. We will also improve our E&E architecture by integrating in-vehicle controllers, reducing their number and expanding the scope of OTA updates.

1:12:12 will significantly improve serviceability through enhanced high-volt battery structure for EV and the application of new technologies. Through this lifecycle cost innovation strategy, we'll reduce our cost of sales ratio by 1.5% by 2030. At the same time, Volvo strengthened the cost competitiveness of both hybrids and EVs through structural cost improvements. Volvo introduced a diverse hybrid line-up from premium hybrids included Genesis to affordable hybrids optimized for each market, broadening our reach across segment and price points while supporting market share growth. Beyond incremental component improvements, Volvo innovated the hybrid system itself. By 2030, We expect to reduce the additional material cost of hybridization relative to ice by 20%. For EVs, we will build economies of scale by strengthening regionally optimized lineups, not only in advanced markets with models like IONIQ 3, our first EV designed for Europe, but also in emerging markets like India.

1:13:18 Also, we will expand the use of cost-effective batteries, including FFP, and develop next-generation motors and engines. to PE system development, we aim to reduce EB material cost by 30% by 2030. By delivering on this material cost roadmap, reduction roadmap, we aim to reduce our cost of sales ratio by a further 1% response by 2030. Finally, let me address our local agent strategy. As discussed earlier, We're strengthening our localization strategy. We'll identify and expand local supplier networks, work for secure supply stability, reduce logistics costs, and mitigate registry exposure. Also, by improving utilization as new plants to reduce fixed costs and by optimizing manufacturing steps and processes, This will improve the cost structures of major plants to HTMC's best levels.

1:14:10 In emerging markets and other price-sensitive regions, we will optimize vehicle specs to meet local requirements. We will also accurately leverage the local operations of global suppliers that meet our quality standards. Through this, we will establish optimal cost structures globally and regionally, reducing the cost of sales ratio by a further 0.5% by 2030. The three pillars I've outlined, life cycle, cost innovation, material cost reduction, and localization, will reduce our cost of sales ratio by 3% by 2030. Let me now turn to our shareholder return policy. In 2023, we announced our next long-term shareholder return policy.

1:14:58 Since then, through the value of program announced in 2024, we have continued to strengthen our efforts to enhance corporate value. So our total payout ratio has risen from 26.3% in 2021 to 35% in 2025. Let me now outline our show for the return plan for 2026. Even amid rapidly changing business conditions and growing macro uncertainty, We will continue to deliver on our previously announced shareholder return policy. First, we will maintain our target of a TPR of at least 35%. To ensure greater communication with the market, we have changed the English term from TSR or Total Shareholder Return to TPR or Total Payout Ratio. This is a change in terminology only.

1:15:52 Our target remains unchanged. Second, to enhance the visibility and stability of divisions, we will maintain our minimum dividend of 10,000 won and our quarterly dividend policy. Third, we plan to cancel all treasury shares currently held except for the shares approved by the General Shareholder's Meeting for employee share-based compensation. We will continue to deliver a consistent and predictable shareholder return policy. This concludes the financial presentation. Please join me in welcoming CEO Jose Munoz back to the stage.

1:16:40 Thank you, Scott. Everything you heard this afternoon rests on something no other automaker has. More than 70 group affiliates. About 477 trillion won of group revenue last year. 335,000 people. Steel, parts, logistics, finance, construction, robotics. When we decide to move, we can move the whole value chain. And we do it while keeping a promise that matters more to me than anything on these slides. We have donated 320 million dollars for pediatric cancer research since 1998.

1:17:26 Now expanding into India and Europe. We have helped save more than 40,000 lives. More than two million trees planted across 13 countries. 945 tons of marine waste recycled into vehicle components. and 100% renewable energy across our site in North America, Europe and India. Let me lead you with where we stand. Record revenue for the 2025 financial years and again in the first half. Market capitalization 2.3 times last year's average. Third in the world by volume, second in profit.

1:18:15 5.55 million sales by 2030, with 60% electrified, a margin above 9%. More than 100 launches, 127 million units of new capacity, and a total payout ratio of 35% or better from 2027. And the products, the all-new Tucson, Santa Fe E-REV, the GD80 hybrids, The brand new GV90 and a new decade for Genesis. Our fundamentals are strong. Our strategy is clear. Our team is energized. And with your continued support, I am confident about what comes next.

1:19:03 Thank you for your time, your trust and your partnership. It is a great time to be with Hyundai Motor Company. Thank you very much. The Q&A session will follow shortly. We kindly ask you to remain seated while we prepare for the next session.

1:32:30 by our management to the platform please.

1:33:06 Good afternoon. I am the moderator for the Q&A session, Michael Yoon of IR Group. We'll now begin the Q&A session of 2026 CEO Investor Day. I would like to first begin by introducing the management that is participating in the Q&A session. First, the CEO and President, Jose Munoz. AVP President, Park Minwoo, Minwoo Park. Head of GSO, Heungsuk Kim. Head of Global Business Operations, Yong Lee. The CFO, Scott Lee. Head of Electrification and Energy Solutions, Sanghwan Kim, and Head of IR Department, Zion Koo.

1:34:01 Now we'll begin the Q&A session. Those of you with a question, please raise your hands. And to provide as much opportunity to others, please restrict your questions to two or less. And before you ask your question, please state your name as well as your affiliation. So if you have any questions, please raise your hand. Okay, so I think we have a question on the right-hand side. Lee Sunho from J.T. Morgan. Thank you for giving me the opportunity. I have two questions for you. First is in the U.S., you said that you are switching your portfolio to a hybrid. And the uptime rate, however, because of that, the battery plant uptime rate will not be as high. And some competitors are selling these JVs due to this. So do you have any mid- to long-term strategy for your JVs for batteries? Second question is for Minoo Park.

1:35:09 The Atria AI, if you apply that to the vehicles, the electricity consumption is going to be pretty high. So in hybrid or ICE model, will there be restrictions? Or will it be regardless of the power chain? Will AV be possible? Thank you. Thank you for your question.

1:35:36 Concerning the strategy in the United States, as I said, it's very simple. So we need to provide the customers what they want, right? And given the current condition in terms of the regulation and then the customer demand and the particular situation in the U.S. market, definitely hybrid is the biggest opportunity. Not only the total market is growing, but we are growing way more than that. So you've seen that in Q2 alone, about 70% of our growth in the hybrid models because they are highly competitive in terms of performance and in terms of cost. And most importantly for us, also in terms of profitability.

1:36:22 So that's why one of the simple ways to enhance our business is to focus, increase capacity, launch new hybrid models and sell more. Concerning the battery, the JV, so you may have noticed that also, unlike some of our key competitors, we have not stop our investments on electrification. We have simply adjusted to the reality, and in HMGMA, for example, we are not only producing EVs, but we started production this year also on hybrid models. So we are performing well on EVs. The performance of the IONIQ 5 is very strong. The key point to highlight there is, if you notice in my presentation, linked with the growth of additional business on Robotaxis.

1:37:22 We have signed a contract with Waymo, and we are going to start delivering IONIQ 5 in our plant in HMDMA, which obviously utilizes the batteries that we built in our plants. for Robotaxis. These contracts are very significant and I also announced today that we are increasing the scope to international markets and all those units are gonna be produced also in HMDMA. So I think this is the very simple answer to your question. Simply we try to sell more on all domains but especially Robotaxis is the new channel that is gonna help a lot.

1:38:13 I'd like to answer your second question. I think that was a very sharp question. Shifting to ICE, the AV computer, would it be well operated with stability compared to EV and hybrid? It could be a bit more complicated, that is true, as well as in terms of control, the trajectory that is offered by AV to follow that. Doing that in ICE and doing that in EV is very different. So for ICE models, the control optimization would be required for sure. But because of that, AV performance or stability, it won't have big of a gap. But in terms of key characteristics, for example, how fast it switches lanes or how it fastly runs, at the back end, the control logic will have to be optimized as much as possible.

1:39:13 In that sense, we... have the control experiences accumulated with ICE engines, and if that will be helpful to us, and the gap between EV and IC, how that can be bridged with the controller would be a key aspect. The experiences that have accumulated, if that is well used, I think it will be a good solution. And if I could elaborate further, the various... The coolant, for example, is going to be cooled by air or water. It's very different depending on the model, whether it's air-cooled or water-cooled. So for the ICE engine, there are also restrictions due to this, and how that is going to be configured would be another key factor, and our team is currently working on that.

1:40:09 Thank you. Next question, please. So from Samsung Securities.

1:40:16 Hello. This is from Samsung Security. Thank you. I have two questions. First is on robotics. The other is about battery. So at this year's CEO robotics region was announced we had high expectations. So in the previous senator's meeting, robotics has not been included in your business scope.

1:40:43 Like training center, production plans, Post Dynamics Self Robotics Business will be upgraded by your subsidiary, I guess. Physical AI requires a huge amount of resources, so if you just pursue with subsidiaries only, HMC only has auto business, so it's not going to lead to a lot of valuations a lot. So what's the reason behind this business structure? Can you elaborate on this? And according to what we know, robotics lab will kick off production of portable robotics linked to revenues.

1:41:31 Then robotics left will be enough you have this plan and the other question is about therapy from next year yet if you will be mounted with ready and that's going to be skilled up to the body then by 2030 Is it that HMC will produce in non-validates, or are you going to outsource that? Just like hybrid, and how much internalization rate will you have in terms of cost reduction? Material cost will be brought down by 1%, you said, and EV and hybrid will make significant contributions.

1:42:18 Can you elaborate on this? Thank you.

1:42:22 Thank you very much for your question. On the robotics, to tell you that, as you know, HMC is the main investor, so the HMC is not the company that is running the robotics, but is the company that is supporting, thanks to the structure of the group, all the ecosystem development of robotics, and is supporting with finding the facilities, finding the the utilization, the application, and then providing to the robotics company all the expertise that the robotic company today doesn't have, like manufacturing expertise, like safety, like quality, durability, reliability, cost management, mass production, et cetera. So the structure is like this because the companies are, for the time being, separated companies.

1:43:21 I don't know what the future will bring in that area, but then to add to those activities, I would like to invite our EVP in charge of robotics to give us additional information. Yes, thank you for your question. As mentioned by Mr. Munoz about the overall business structure, so already this year at the CES, we announced that robotics overall, robotics innovation, will be implemented into our manufacturing so it's intertwined with one another and to that end there are so many capabilities required which will be done based on the cooperation with HMC which will continue which is on track but as you asked The business scope in the Articles of Incorporation, to implement this, that does not really require the change of the Articles of Incorporation. As explained by Mr.

1:44:27 Medeiros, those are separate entities at the moment.

1:44:32 So you could interpret that way. And robotics-led spin-off possibility. You ask about it across the group. Robotics dynamics, sports, touch, athletics, through all these, they work on robotics and the product, as you know. Yes, thank you for the question. Thank you for your question about battery. As you said, battery, which will be mounted to ERB, while working on this, we do have our own internalized Technology. It just said about hybrid.

1:45:31 Design will be done by HMC and manufacturing will be done by HMS. That model is now being implemented. So at HMC, we are a auto mobility service provider. So about battery, it's not about in-house development. It just said in terms of performance, cost. volume, safety, durability, there are requirements. If these requirements are met, when we make cars or robotics or future mobility battery packs, is it enough? Well, on those fronts, yes, we could provide an easy answer, but our own performance level we need and cost levels

1:46:18 to have enough competitiveness. Of course, if we want to have differentiation in engineering design and manufacturing, we'll need to have relevant capabilities. We'll need to make preparations in terms of technology and so on. You could interpret that way.

1:46:42 Thank you. We'll take the next question. Okay, we have KB here. Thank you for giving the opportunity. I am Ga Sung Jin from KB Securities. First, it's regarding the OP margin, your target. You said 9% by 2030. That's a very high target, so it seems very encouraging. But if you think about it, as of 2028, STD goes into production as well as Atlas. and they will require a high cost. While an SDV in particular, do you think it will be able to transfer the cost to the price? As for Atlas, based on articles and meetings, I heard that it could be somewhere close to $300,000 or $400,000 USD.

1:47:30 So do you think it will have enough productivity so that it doesn't impact productivity or will it negatively impact the long-term profitability? So what is your outlook on that? That's my first question. My second question is for the CEO. You mentioned that at the beginning, Hyundai Motor Group is a global Korean company, but one of our weaknesses is also our nationality because mobility and robotics industry was more of a security industry compared to automobiles. and many of Hyundai's sales come from global markets. So the higher the security firewall, I think it will be more difficult for Hyundai. So what my question is regarding is on foreign resources and collaboration with foreign institutions. So do you think Boston Dynamics will be able to win investments from overseas partners?

1:48:28 Is there any risk regarding security walls or barriers, should I say? that prevents any investment from overseas institutions. Do you have any policies regarding this?

1:48:42 You want to talk about the margin and then I will complement?

1:48:47 Okay, I'll answer the first question. Last year it was 8 to 9% and this year we have increased it to over 9%. And like I mentioned, from the beginning of the year, with the EC as well as our manager including Jose, we have been very stringent in running down our costs and that was reducing saving costs for the mass production vehicles. So we have found a lot of opportunities there and as of this year, we are seeing some outcome. And that will continue until 2030 and that could lead to trillions of won. Based on our estimation, that was reflected in this number.

1:49:32 And the transition to STV, yes, the cost will go up. But compared to the increase in cost, will we be able to – I mean, we already have a value of the specification that the customers are willing to pay for, and that is higher than the cost itself. But what we are thinking about is if we reflect that fully into the price, the MSRP, the list price will go up, which means the accessibility will be not good. So we need to take that into consideration. And President Minipark is currently considering how that should be rationally applied. As for Boston Dynamics, BD is not included in our consolidated sheet.

1:50:19 with Atlas production, we don't know who will, with what stakes, but it's not going to have a big impact on our profitability. With the mass production going in 2028 at the beginning, yes, the depreciation will be reflected, but for the initial volume, that can be digested within our group. So that can be taken within our group. And we think the profitability will improve quickly. If I could...

1:51:04 So if you shift to SDV, the most important is the consolidation of the controllers. And to do that, many software will have to be internalized. What we are trying to pursue right now and what we think is critical is the validation of software. And that will require most of it to be internalized and validated. And if there is any problem that arises, it will be much easier for us to control the issue. And because the control is integrated, the memories that have been dispersed before, let's say, for example, we used 100 mega because it was dispersed, but when it's consolidated, you can only use half that amount. Increase in quality is really to do with recall risks, which could be lowered.

1:51:51 So taking all that into consideration, shifting to SDV, might look like an increasing cost. However, in the end, it's to do with quality control and integration so that we use less memory to produce the same level of performance. And many of it will be internalized, which means we can come up with new cases when we just change the brain. So with all that into account, it may seem the cost goes up at the beginning, but In the end, everything will be cheaper and more effective in the end.

1:52:29 To complement all your questions, so far I think our company has been able to increase the margin in many cases by increasing the value of the company, not only the technology but the brand. And the brand, you have seen some of the key metrics that are presented are highly valued by the consumer, like the top safety peak, plus like the consumer report. So they are at the very top, not to mention improvement in the quality, durability, and reliability. So that is very important. Also through the presentation, I have expressed like we have the opportunity to expand our business into areas of the business which are – more profitable, like body of frame, like large SUV, like luxury as well. There is yet another dimension which is very important that we are now working diligently to improve, which is synergies. So synergies within the group is a very important element.

1:53:41 So and as we have been able to navigate situations which are complex in terms of the supply chain management, et cetera, we have, in parallel, been able to improve our mix. We have been able to also improve our trim and option in a way that, as you notice, we have achieved all-time record revenue in the first half in a very challenging condition. Another element which is very important to be confident on the margin is the regional mix. You see that we are having a plan to improve our performance in China, okay? That's very, very important. Another very important element is the increase in capacity in one of the highest margin regions in the world for us, which is the Middle East, right?

1:54:32 And also the USA. The USA is already the largest region and the largest profit contributor, and it's increasing, as you saw in our investment plan. So when it comes to SDV technology and other technologies, I think the group has demonstrated the ability to first and foremost provide the value to the customers, so the features, the technology needs to be the best in the market, and then in parallel try to work to make it affordable, to make it competitive, and then also convey into the market and transfer into the markets some of these incremental costs and more, if possible, to get to higher margins.

1:55:17 So before tariffs, I think we were able to do more. So nine is a very good positive number, but of course we will strive to do even better if we can moving forward. Thank you. Next question, please.

1:55:44 I have two questions. First, the biggest interest from the market is about humanoids.

1:55:50 And on humanoids, Bolson Dynamics has a certain amount of shares in terms of humanoids. We're voting for America and supporting investment through this. How much exposure would you have humanoid business exposure? This is the question from the market. I think the exact figure of the share has not been fixed, but majority stake will be taken by your company, or if there's anything you can share about this, please share if it's possible.

1:56:30 If it's possible, until when you can share? Please share this. And the second question is about OP margin targets, which will be 9% or higher, he said, which is good. Exchanges rate, tariffs, and raw material costs that impact OP margins significantly for the past one and a half years have changed a lot. So by 2030, about those, what assumptions can you have? Thank you. With Boston Dynamics, you ask about RA with Boston Dynamics and the possibility of majority stakeholder of our company As you all know, Boston Dynamics has made a lot of announcements at CES, and to enter the pathway, there is announced there are investments underway.

1:57:42 And as for RA, Global Dedicated Manufacturing Facility, that is.

1:57:47 So with all those established, will be established, which is one of our strategies. So key components, systems, how could they play how could auto OEMs can engage in that area, not just in upstream and downstream. So there are so many different dimensions to be considered.

1:58:18 Of course, at the very center of it is Humanoid Atlas of Volcan Dynamics. So how are they going to be deployed into our plants and data flywheel accumulated or along the journey and the data that will be advanced. So things are now underway overall. So what I said was about the additional funding. I think the question was about additional funding possibility with all various options. We're now considering various options. At the moment what will happen or at what I mean we're going to give a clear answer well to answer that it'd be really difficult but as I said there are so many dimensions not just a surgical one about person dynamics so things are intertwined so considering all those the overall plan and the optimized scheme considering all those if there's anything we can share we're going to share with the market about the second question will be target 9% and higher.

1:59:34 When we set the target of 9% and higher, you ask about the plan. Based on the assumption the tariff will be maintained at the same level, we set our target and will material cost in the first half. So there is an increase of raw material cost over 600 billion. Majority of them has been offset by cost reductions about half. And in the back half, so raw materials have peaked in the first half, and they are now going down now. So considering that, we made the assumption, and as for an exchange rate, It's made 1,400 on average. That was the assumption we made based on which by 2030 we set our profitability target.

2:00:27 Operation-wise, to add more, for working on our business, profitability is the most important we consider.

2:00:36 First, by 2030, CEO's vision versus this year's global volume, 5.55 million. If we achieve that, There could be contributions to be made. That's the big chunk. And thanks to the skill, we will be able to bring down costs. And the second one is that our profitability model will be improved further. And Genesis, it will be about $200,000 to $300,000 and above. And Tully Seed in the U.S. market. will boost this field based on the strong supply.

2:01:22 So even in new markets, we are going to make entries. So body-owned fame will be launched, and there we will also have additional profits. On top of that, the U.S. localization, 80% was mentioned. While working on this, we are going to address the Taiwan regulation and through which We are going to localize the supply chain at the same time. So on those fronts, we'll be able to bring down costs.

2:01:55 Thank you. Next question? From City, Mr. Hwang.

2:02:04 Good afternoon. I'm from City Securities. I have a question regarding areas of focus or resource allocation, and the next question regarding SDV rollout. Today you said by 2030 the product launches plans were shown, and the impression that I get is wherever there is the sales, there will be incremental revenue. increase. But no matter how big a company is, you cannot just all your resources everywhere. So what I'm personally worried about is China. China, whether you look at the nature of the market or Europe, considering the strategy of using the Chinese suppliers to lower costs, they're not giving up on this market. And if we localize, you also require incremental efforts. And in theory, the genesis, the margin might be good, but if you look into marketing, that might not be the case. So are you really going to aggressively target China with high profile, or is it going to be more low profile and spread and focus our resources to other regions?

2:03:18 I mean, I think the latter may be better. So for what reason... Do you have confidence that we will do well in China? What is your rationale on that? Second, regarding SDV rollout, whether it be the base car or the SOP period, compared to two, three, or five years ago, the timing is being delayed. Is this because of our partnership with NVIDIA that there has been an incremental add-on on the time? or was it because of a more complicated regulatory environment that was not easy, or was there an actual bottleneck to the rollout, and if so, what was it and how can that be rectified? Thank you.

2:04:07 Very good question. I'll address the China thing, and then Minwoo Park will address the SDV. So on China, Everyone has different starting point. Our starting point is that we have capacity. That's number one. Also is that China is a very good export hub to many regions. And then when you put this together, a very realistic plan, which is not a kind of just trying to do any extraordinary thing, but very realistic as a percentage to achieve 500,000 sales, which would guarantee for us to overachieve break-even point by executing very smart and pragmatic actions.

2:05:03 like strengthening our partnership with our web bike, but also utilizing local suppliers and technology companies. For example, earlier this year, we announced the partnership with Momentum. So we are also in terms of autonomous driving technology. We are also partnership with the CATL and we have more in the pipeline. So China has demonstrated the ability to develop a good technology vehicles and for us to be in that market with a realistic target. It is also a way for us to get better in this market, which also allows us to be competitive exporting to, for example, Latin America, to Middle East, to Southeast Asia, and utilize the same technology in Europe.

2:06:00 In our case, we already have the capacity, so it's not representing an incremental CapEx investment. as we are doing in other regions. The other answer to your question about the capital allocation, you've seen that the capital allocation is basically a focus on high profit pool opportunities. So we made the analysis in terms of the product and we've seen that close to 30% of the market we were not competing and that market is highly profitable. The luxury market, the body-on-frame market, the high-performance market, they're all high-profit markets already for us. And then also the incremental capacity out of the 1.27 million incremental yearly capacity, the regions where we are investing the most are high margins. So it's a very clear capital allocation based on margin opportunity. So mainly United States, but also in the Middle East, in Saudi Arabia.

2:07:14 Saudi Arabia, we're number two, is the highest profitable market for us. And with the new plans that we are building, expecting to end by the end of this year, we should be able to do more. So basically, everything that we do, we try to grow the business, but grow smartly and be efficient on our capital allocation, taking advantage in the power of the group. India, for example, is a very profitable market for us, but also is extremely profitable for export markets. So our investment in Pune with 320,000 incremental units is allowing India to export 30% versus roughly 25% last year. This allows regions like the Middle East and then Central South America to take advantage of that product, which is very competitive, and increase the volume and the margin.

2:08:14 So that, I hope, helps clarify how we are doing the capital allocation and why China is in the picture. Concerning SDB.

2:08:31 Yes, so regarding SDV rollout, I joined Hyundai on the 23rd of February, and the first thing that I did was to identify what the current status was and if there was anything that was against the direction that you need to take and to correct that. The first thing that I did was the selection on sensors, what sensors need to be selected, for the future scalability of AV that provides no roadblocks and what computing powers are required to support that. So after joining Hyundai, I think that was the biggest change that had to be taken.

2:09:17 And because of this change, it may have pushed back the schedule. It might seem like it pushed back the schedule. And as I presented during the Kia CID, at the end of 2027, the SOP will be prepared and sales will go into 2028. And that schedule does not change. And the basic architecture software of STB is actually mounted on the car that is going to be prototyped and demonstrated in Gwangju. This means that how feasible are we able to release within the time frame that we have promised. We are using the same software, the similar hardware, the integrated controllers in the Gwangju pilot project.

2:10:07 And through that project, we will make further improvements so that By the end of 2027, we would have made a lot of trial practice with further refinement. So the release of SDV will not be pushed back further. And if there had been a delay in the past, it was probably due to preparing for the future scalability. And maybe those have been given an impression to the media that many changes are being made.

2:10:52 But the integration of SDV, the software itself, basically nothing has changed fundamentally. We are going as planned and SDVs will be piloted at Gwangju. And our developers will be using those cars while commuting to test AB. So SDV will not be pushed that further as you worry. Thank you. Next question please. Please.

2:11:38 Hello. Thank you for the opportunity to see you from Taiwan Investment Securities. Up until 2024, in the CIT presentations versus hybrid, hybrid's margin was lower, you said. But based on today's presentations, OP guidance has improved by 2030 based on hybrid proportion which is now increasing you highlighted and as of now our competitiveness has improved we understand based on the same car by PT can you elaborate on different margins hybrid margins versus ICE how could interpret that and based on which up until about the 2030 guidance, how could it reach a conclusion?

2:12:33 If you share that information, it would be much appreciated. And the other question about robotics is about 300,000 production capacity was mentioned. And the 300,000 robots, can you share the breakdown? will it be just second generation Atlas or some of them will be just four legs or logistics robots? You talked about BD a lot, so can you share such details? It would be much appreciated for analysis.

2:13:15 The first part of the question related to the hybrid. So you saw that we started hybrid with just very low mix with the Sonata Sedan Hybrid, 1%. And then now we are around 25%. And then especially in the US, the hybrid mix is growing significantly. So normally every month we're growing in hybrid somewhere between 50 to 70%, which is quite remarkable. Obviously, the increase in the production of hybrid is a broad economies of scale, but also our R&D colleagues have made significant improvements in terms of optimization of the hybrid system across all the elements, like also EVP someone, Kim, has explained in terms of the battery.

2:14:21 And you may expect that the next generation of hybrids to have lower cost, higher efficiency, and therefore allowing our company to be more and more competitive. This is not a coincidence. Obviously, when we look at our mix of products, I've said that by 2030, 60% of our vehicles are going to be electrified. And then within that, the hybrids are going to be, unless there are significant changes in the North American market, still very relevant. So I think I could summarize by saying today hybrid margin is the highest, ICE is the second, and we're making good progress on the EV. And then I like some of our competitors, our EVs are profitable, especially when you consider the credits and the profit contribution that they allow us through precisely hybrid and ICE products. So we'll continue with that journey. And then now the mission is to ensure that we have also a so-called low-cost hybrid for emerging markets where we see also a very clear trend with that technology. So maybe HS.

2:15:43 very good about the u.s. robotics production plant you ask a question so to answer that going beyond just atlas other bt products will be produced at the plant so that's our plan in line with that to share more A lot of manufacturing capabilities our group has built and manufacturing solutions group has worked with BD based on all the capabilities, the so-called robot by robot. The most advanced robotics plants will be established under the plan.

2:16:34 But the key here is flexibility and adaptability. With our own internal business plan, the robotics market trends and the corresponding manufacturing and allocation plans are also underway, but the market itself is really dynamic.

2:16:57 And Atlas's role is now improving further. Yes, thank you.

2:17:28 Thank you. Due to the lack of time, I think this will be our last question. Anybody with a question, please raise your hand. Okay, we have two people raising their hands. Thank you for giving me the opportunity. I have two questions. First is for the CFO. As it is written on the screen, by 2030, you'll be launching more than 100 models. Would it include facelifts of existing models? If that is so, how many models is actually increasing? The reason I'm asking this question is because developing a single model, the development fee will then be big.

2:18:25 and resulting in increasing costs. And despite that, you are saying that an OP margin of 9% is possible by 2030. And 5.55 million unit sales by 2030, it really will be a big contribution to Hyundai Motors. But as an analyst, if I try to be very conservative, maybe 4.5 or 5 million units if we estimate the revenue because you emphasize hybrid how much of contribution would that make and how much contribution would EV make what would be the proportion of the contribution margin of each of the models because I want to identify by each powertrain maybe roughly if possible and my second question is also regarding SDV and directed to Mr. Park.

2:19:26 You mentioned and emphasized about the data flywheel. Within SDV, we have Pios Connect. And what we're more interested in is actually Atria AI. And this is something that was somewhat designed by your predecessors, so we were curious on whether you would continue with his legacy, and it seems that is the case. Then why was sensor standardization not done so far? Because I know that it would have been very important within the group, so the fact that sensor standardization had not been done so far, even now, if you have to have high-quality data, you would need a standardized data. So if that is being done now, maybe it's a bit too late.

2:20:27 And would you be able to gain data from individual vehicles for personal use? Because for Gwangju, you said that you're going to collect data from the pilot project, but compared to your competitors, I think you're pretty slow in gaining your data. And if NVIDIA is also involved, maybe the speed might go up, but How will you be able to open a very positive scenario? Because I think that's not going to be very possible in the near time. Thank

2:21:00 you. Let me start with the product question, and then I'll move to the CFO on the margin. Using 100 products, roughly, I've shown 50% are brand new segments for us. And then the other 50% is existing ones. That's number one. Second one, I've shown also, we are optimizing and then capitalizing on the optimized number of platforms. Out of the existing ones, we are co-creating platforms to be efficient and to optimize the cost and the performance. And in the new ones, if you look at it, the new platform that we are proposing introduction is the body on frame. So basically, you've done your own calculation.

2:21:59 We've done our own calculation. 5.55 million is the reasonable volume with the platforms and then with the expected synergies in the group and the capacity that we have. that can bring the best return on investment in our particular case. So the 100 is the value to each individual market and our dealers and the consumers, but obviously the back office we see differently. 50-50 and within the 50, existing utilization of existing platforms and power trains. We've also included in this announcement 19 new hybrids as the key driver of profitable growth.

2:22:51 Maybe, Scott, you want to elaborate more on margin?

2:22:58 Yes, so you talked about contribution margin, and we cannot open that by each model. However, as a big picture, the contribution margin on average, the marginal profit is a little over 20%, maybe between 20% and 30%. And hybrid average is about 5% higher than that. Now, regarding autonomous driving, and I will try to answer the question. So, continuing the Atria AI, we are not using it as is, of course, because when I arrived, it's been six months since I joined Hyundai.

2:23:46 And six months ago, the Azure AI architecture then and now is pretty different. But we didn't start from zero base. And where we were was not that bad of a position. So we wanted to improve the architecture. So we are carrying over the Azure AI but making improvements to it. You also mentioned about the data for autonomous driving. I also want to apply satellite sensors to the cars that we sell right now.

2:24:31 And when I see the YouTubers, they're asking, why don't you have, like, the sensors, high-frequency sensors of Avante. And It actually takes a lot of time for these specifications to be reflected in the plan. So the car that applies with the status sensor will be as of 2028, and as rolling change, we will be cascading the common sensor. That means that with personal vehicles, the data will be collected. And whether it be ANDA, the NVIDIA solution, or whether it be our solution, in terms of AI model, the so-called edge corner data will be collected through the cards. And the KWANGJI pilot project, to us, we don't think of it as an opportunity to collect data.

2:25:34 It's more to demonstrate of the data flywheel from A to Z. It's a very good forcing function for us. Of course, the data collected there will be pretty much meaningful. However, considering the production capacity that we have a year, which is a very large scale, it's not really comparable to that. So in conclusion, what I want to say is that the common sense rollout will be done. and with these series products, the data that is collected through the sensors, we will be enhancing our AI model. And as I had mentioned in my presentation, as of 2028, the vehicles produced then, the rollout changes will be applied so that we can collect as much data with these vehicles with commonized sensors and computing.

2:26:32 I said 2033 in my presentation, but it's a bit of a certainty, but roughly around that time, we believe that we'll be able to overcome their accumulated data by 2033. So we'll meet a break-even and collect more than our competitors by then. Of course, our target and our reality might slightly change depending on the situation but our goal is to input as much common sensors as much as possible and we're all working together to get that done more details and you would probably want more specific numbers but that currently is in progress so we cannot open that to you but we will come up with another venue where we can share that number Thank you.

2:27:31 This will be the end of the Q&A session of 2026 CEO Investor Day. The mid to long term strategy of HMC will be consistently updated so that it is communicated not only to CEO Investor Day but other various platforms. Thank you for your time today.