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Hyundai, Hydrogen, and the Search for a Sustainable Corporation

Defining Sustainability: Part Six of Eight

By Jack Rosebro

Hyundai Motor Company executives pledging their support in 2003 to the goal of being one of the top five environmentally friendly automakers by 2010. The current status of this initiative is unclear.

The Hyundai-Kia Automotive Group (HKAG) is, by any measure, an auto industry success story. Established in 1967 as the Hyundai Motor Company, it was created by the Korean industrial juggernaut now known as The Hyundai Group. HKAG is considered by some automotive industry insiders to be Toyota’s most serious long-term competitor.

The Hyundai Group’s many business forays over the past half-century have been diverse, from manufacturing to banking to tourism, but its best-known division is probably Hyundai Heavy Industries, Ltd.

This oil tanker built by Hyundai Heavy Industries, Ltd. is the first modern commercial ship built entirely on land, due to Hyundai’s two-year waiting list at its dry docks.

The breadth and amount of HHI’s design and manufacturing prowess is staggering. Its subsidiary Hyundai Shipbuilding, for example, is the world’s largest shipbuilder, having produced more than 1,100 commercial ships—container and freight ships, oil, gas, and chemical tankers, hydrofoils, and cruise ships—since 1972.

One in five ships produced each year is built by Hyundai, which has put into service ship engines rated at 93,000 bhp, and marine propellers that weigh more than 100 tons. HHI’s Special and Naval Engineering Division builds destroyers, frigates, and fuel-cell equipped submarines for the Korean Navy.

HHI’s Offshore and Engineering Division, meanwhile, has constructed more than 3 million metric tons of offshore facilities and laid more than 3,000 miles of its undersea pipelines. Various Hyundai companies design and build oil and gas refineries, hydroelectric power plants, elevators, construction equipment, industrial robots, electrical transformers, solar panels, nuclear power plant components, gantry cranes, and waste treatment facilities.

More than a third of the world’s marine diesel engine business belongs to Hyundai. One would be hard-pressed to find another company with as broad a portfolio of experience with so many different energy production and delivery systems.

Hyundai’s Ulsan Plant, which covers almost two square miles, or five square kilometers, employs 34,000 workers, and has an annual production capacity of more than 1.5 million vehicles.

Hyundai as Automaker. Hyundai established Hyundai Motor Company in 1967. HMC built Cortina automobiles under license from Ford in its early years, and began to export Korea’s first independently designed and built automobile, the Hyundai Pony, in 1976. The Pony was first exported to the United States as the Excel in 1985, and HMC sold 126,000 Excels in the US that year— the record for any automaker in its first year in this country.

However, early Hyundais were plagued by poor quality, and the car company was known more for its placement in comedians’ punch lines than for its products.

Hyundai Motor Company (HMC) began to overhaul its image and product quality in 1998, the same year it acquired Kia, South Korea’s oldest car manufacturer. In 2000, HMC’s parent company The Hyundai Group began to restructure its operations, and spun off many companies, including Hyundai Motor Company, which later restructured itself into a collection of affiliated companies referred to as The Hyundai-Kia Automotive Group (HKAG).

By 2004, the Hyundai brand’s reliability problems had been reversed, and J.D. Power and Associates ranked its product quality as second only to Lexus, besting all US-based and European automakers.

Hyundai’s US model lineup has expanded beyond the original Pony/Excel to four sedans, a coupe, and two SUVs. Its Entourage minivan will be released in the US this year. HMC sells vehicles in 193 countries, including cars, SUVs, commercial trucks, and buses. Hyundai has one US manufacturing plant in Montgomery, Alabama.

Kia, which builds trucks, buses, and military vehicles as well as automobiles, has also expanded its US lineup from one sedan in 1994 (the Sephia) to four sedans, two SUVs, and a minivan today. Kia has not yet had the same success improving the durability of its products as has Hyundai. Kia announced last week that it would build its first US manufacturing plant in West Point, Georgia.

Hyundai and South Korea’s Hydrogen Economy Last August, the government of South Korea approved one of the most ambitious and specific blueprints for a hydrogen economy yet tendered on a national scale (earlier post).

The plan calls for the country to create a functioning hydrogen economy by 2040, with half of its automobiles and more than 20% of its power generation and household appliances as possible operating on fuel cells. Fuel cells are targeted to account for 8% of South Korea’s GDP by 2040, creating a million new jobs and reducing CO2 production to 80% of the country’s current levels by that year.

Less than a week later, the South Korean Ministry of Science and Economy announced plans to work with the United States to develop a so-called Generation IV nuclear power system, using a very high temperature gas-cooled reactor that can also produce large quantities of hydrogen.

It is difficult to imagine South Korea pulling off such an ambitious plan without relying heavily on the sprawling collection of companies that have risen from the humble beginnings of Hyundai as a construction company in 1947.

The contribution of Hyundai Motor Company will undoubtedly be key to that plan. Only Iceland has a more optimistic plan for creating a hydrogen economy—almost 100% by 2050—and that plan relies heavily on corporate support, using the country as a test bed of sorts. Iceland represents a far smaller conversion project: its entire population stands at around 300,000; South Korea’s population was estimated at more than 48 million in July 2005.

In light of Korea’s ambitions, it’s no surprise, then, that while the hydrogen fuel-cell research of DaimlerChrysler and General Motors (and more recently, Honda and Toyota) have been in the limelight in recent years, Hyundai has been anything but idle.

Hyundai’s first-generation fuel-cell vehicle, the 2000 Santa Fe FCEV. A pure electric-drive Santa Fe EV is in the background.

In 2000, HMC unveiled the Santa Fe FCEV, its first prototype fuel cell vehicle. In 2004, Hyundai opened its Environmental Technology R&D Center in Seoul with the intent of accelerating its work on clean transportation, and announced plans to invest over $2 billion US and add 3,500 research personnel to its R&D divisions that year.

The five-story facility supports 200 researchers, and includes a 700-bar (10,000 psi) hydrogen filling station, a fuel-cell endurance tester, an emissions lab, dynamometers and other specialized equipment for testing electric propulsion systems.

An on-site pilot plant for automated vehicle dismantling focuses on improving the material recycling rate of end-of-life vehicles, and two employees at the small facility dismantle about 2300 vehicles per year. End-of-life automobile dismantling (disassembling vehicles immediately after their service life has ended, removing toxic components, and recycling as much as possible) became mandatory in Europe in 2002 and Japan in 2005.

In line with the purpose it was designed to serve, the center itself was built with:

  • Vacuum toilet systems which use one-tenth the water of a conventional flush toilet;

  • Heating and air conditioning systems using heat pumps;

  • Natural light systems using solar reflectors; and

  • Floors made of scrapped tires.

Even the electric power created from actual fuel cell tests is used as energy by the center.

By 2005, Hyundai had unveiled its second-generation fuel cell vehicle, the Tucson FCEV, which has a stated driving range of 186 miles (300 km), double that of Hyundai’s first-generation vehicle. Hyundai claims that the Tucson FCEV is capable of starting after being subjected to -20º C temperatures for five days.

Entering this new phase of our program will allow us to build fuel cell electric vehicles at higher volumes for fleet testing applications,” said Kim Sang-Kwon, president of research and development for Hyundai-Kia Motors. “It also brings us one step closer to the commercialization of fuel cell vehicles.

Joon-Chul Park, Senior Vice President of Hyundai Eco-technology Research, echoed this sentiment, asserting that “almost all vehicles manufactured [by Hyundai] after 2050 will be powered by fuel cells.” Hyundai’s fuel cell fleets operate out of AC Transit of Oakland, California, Hyundai America Technical Center, and California utility company Southern California Edison.

Hyundai and Sustainability. Energy security is, of course, one reason for South Korea’s hopes for a hydrogen economy. In the face of mounting greenhouse gas emissions, sustainability is another. But what does Hyundai Motor Company have to say about sustainability?

Hyundai is apparently the first major automaker to replace its annual environmental report with a specifically named annual Sustainability Report, first released for fiscal year 2002-2003. In 2003, Hyundai and Kia corporate management pledged their commitment to “ECO GT5 2010”, a plan to transform both brands into the top five environmentally-friendly automakers worldwide.

Key to this lofty goal, of course, would be a methodology for measuring the environmental performance of each major company that produces automobiles and other vehicles. However, no methodology was tendered in Hyundai’s first sustainability report, and there is no mention of the ECO GT5 2010 initiative in HMC’s 2005 sustainability report.

Hyundai’s vision of a sustainable society achieved through a balance of the triple bottom line: a three-legged stool resting on economic, environmental, and social concerns.

Not surprisingly, Hyundai utilizes the somewhat imprecise “triple bottom line” definition of sustainability that is by now familiar to followers of this series. The concept of the triple bottom line provides corporate leaders with a springboard from which to launch inspiring environmental statements:

  • HMC Chairman and CEO Mong-koo Chung, for example, writes that “one of our key goals is to provide a balance between economic growth, social responsibility and environmental stewardship for the future.”

  • Vice-Chairman and co-CEO Dong-jin Kim states that “one of our principle tasks is to create a sustainable balance in our activities reflecting our economic, environmental and social responsibilities.

Elsewhere, Hyundai has said that “sustainable society is the new socio-economic model for the 21st century, the core objectives of which consist of affluent prosperity and harmony among global citizens and future generations, without neglecting their rights.”

In theory, the triple bottom line is all about balance, but the trick, it seems, is to parse exactly what can reasonably be called a balance between a corporation’s mandate to expand and its perceived social and environmental responsibilities. Last October, for example, Wal-Mart CEO H. Lee Scott paid a grim homage to the search for that balance during a speech in which he said:

There will be a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory, where you save three cents a foot in the cost of garden hose, are developing cancers at significant rates—so that the American public can save three cents a foot—those things won’t be tolerated, and they shouldn’t be tolerated.

Hyundai’s energy consumption, GHG production, and water consumption from 2000 through 2004, stated in relationship to units sold as well as in overall numbers. Click to enlarge.

The chancy job of measuring the balance implied in the triple bottom line is also illustrated, perhaps unwittingly, by charts in Hyundai’s 2005 Sustainability Report that illustrate the company’s consumption of energy and water as well as its production of greenhouse gases from 2000 through 2004.

The data is stated twice in each chart: as consumption (or production) compared to units sold—a common method used by many corporations to present unflattering environmental information—as well as total consumption (or production).

The charts show that, although Hyundai did indeed reduce energy and water usage, as well as GHG production, per unit sold, its overall consumption of resources—and, not surprisingly, its production of GHGs—increased significantly each year.

Hyundai should be applauded for presenting such data in a straightforward, if not flattering, manner; however, if its vision of sustainability is to progress, it must develop a plan to halt the inexorably upward march of those and other numbers.

A ray of sunshine might be gleaned from one sentence in the preface to Hyundai’s 2005 report: “As this is our third sustainability report, it focuses extensively on intents, business processes and structure, and performance, however, future reports will focus more heavily on performance analysis.

One can hope.

Next week: DaimlerChrysler—How the Global Corporation Tackles Greenhouse Gases


richard olivier laveder

Regarding the new technological buiding built by Hyundai; I would like to know which technology concerning vacuum toilet system is beeing used in the new Hyundai buiding?
We work with Tets vacuum toilet system from norway,the most advanced vacuum toilet system in the world.

Our Best Regards and congratulations for your system

Richard Olivier Laveder


Hi, how long does it go on hydrogen until you have to fill up again, or how much milage per gallon.How much will this car cost? and finally what year will it come out?


Hi, how long does it go on hydrogen until you have to fill up again, or how much milage per gallon.How much will this car cost? and finally what year will it come out?

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