Hyundai Profits Today while Planning for Tomorrow

Luxury Car Sales Give Hyundai a Boost

Hyundai (HYMTF) sees electric vehicles as a key part of its strategy for the future, but the South Korean carmaker is also focusing on traditional automobiles while demand for EVs catches up to current demand for gas-powered cars. Hyundai reported a 41% jump in its operating profits last quarter compared to the year before.

Hyundai managed to grow its profits last year even though it sold fewer cars. Consumer demand for luxury car lines like the Genesis or sports utility Palisade vehicles drove Hyundai’s operating margins to their highest in over three years. Most analysts expect the rally to continue in 2021.

Hyundai Feels Market’s Push

Hyundai’s luxury car offerings have led to a short-term profit increase and this has caught investors’ attention. Hyundai’s shares have more than doubled in the past year, outperforming most other traditional carmakers. Its market value sits at $55 billion, similar to that of BMW (BMWYY) and Stellantis (STLA).

Investors thinking about Hyundai’s long-term future are also interested in the company’s electric vehicle ambitions. Hyundai stocks surged earlier this month after it announced it was in talks with Apple (AAPL) about a potential autonomous electric vehicle collaboration.

Investors Bet on Hyundai’s Future

Though Hyundai is seeing success currently, investors are largely betting on the company’s future in electric vehicles when they buy shares of Hyundai. Through a partnership with Kia , Hyundai expects to launch 23 models of electric vehicles by 2025. In 2019 Kia and Hyundai announced they would invest $35 billion in the development of electric vehicle and autonomous car technologies.

While last year battery-powered electric vehicles made up 3% of Hyundai’s sales, Credit Suisse (CS) forecasts that they will comprise 11% of sales by 2025. Hyundai is among the largest investors in hydrogen fuel cells, which gives it another leg up in the EV market. Though Hyundai has seen an increase in profits from traditional vehicles recently, many investors hope the carmaker will see even more gains in the coming years as a result of its position in the EV market.

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