Good afternoon. I am Jaehoon Chang, President and CEO of HMC. I would like to thank everyone participating in HMC's 2024 CEO Investor Day, as well as those of you joining us today online. Your continued love and support for HMC has made today's event possible, and I ask for your continued interest.
As you just saw in the clip, HMC is soon to achieve the milestone of one hundred million accumulated vehicle productions this year. This achievement will make us the fastest major global automotive OEM to reach 100 million total vehicles produced from the founding date, and mark the beginning of our push to becoming a future mobility brand. Building upon the unique HMC DNA, which made this achievement possible, we look forward to preparing for the upcoming future.
During last year's CEO Investor Day, I discussed how our strength as a legacy OEM with a diverse powertrain portfolio, including ICEs, hybrids, and EVs, will be used to flexibly convert our existing production facilities to match the speed of the EV transition. Our unique strategy, the Hyundai Way, was emphasized to most effectively and efficiently secure top-tier EV leadership.
Looking back over the past year, there were major changes to the automobile market, with the rosy projections for the EV transition giving way to heightened concerns as the transition began to slow. However, HMC was able to secure profitability and EV competitiveness in response to the aforementioned shift in the market demand, thanks to our flexible response capabilities. Last year, HMC recorded our highest ever operating profit margin of 9.3% and our highest ever operating profit and revenue in Q2 of this year.
We also received an A rating this year from the three major global credit rating agencies, high ratings in product and brand competitiveness, profitability, and financial soundness, and ranked among the global top three in sales with 4.21 million vehicles sold in 2023. These achievements were possible thanks to our tireless efforts to improve sales fundamentals and reduce material costs, including expansion of volume in developed markets and adjustments to mix, our focus on high value-added models such as Genesis and SUVs.
HMC is receiving high praise from our customers and the media, and excellence stands out in the automotive market, with total Genesis sales reaching 1 million in 2023, and total global hybrid sales recently exceeding 2 million. HMG is taking first place in J.D. Power's 2024 Initial Quality Survey.
IONIQ 5 N was awarded at the 2024 Top Gear Electric Awards, and the XCIENT fuel cell electric heavy-duty trucks recently surpassing a cumulative driving distance of 10 million km in Swiss fleet usage. HMC will continue to build upon the achievement to solidify our presence in the automobile market. Now, at today's CEO Investor Day, to become a smart mobility solution provider, I will discuss HMC's mid- to long-term strategy, Hyundai Way, to prepare for the upcoming future.
Amidst uncertain market conditions, Hyundai Way seeks to secure a sustainable leadership through Hyundai's unique, flexible response system, so-called Hyundai Dynamic Capabilities. While agilely responding to the market, mobility and energy will be our two pillars in creating the new future. So let me delve into the Hyundai Way strategic direction. First is Hyundai Dynamic Capabilities. Hyundai Dynamic Capabilities embody the production flexibility-centered Hyundai Way.
In the short term, it means responding flexibly and agilely to the rapidly shifting market environment, and at the same time, in the long term, it means continued efforts to maintain superior competitiveness. This would be our core competency. The shift to EV is currently slowing down. However, in the long term, it is abundantly clear that the market and HMC's path forward leads towards electrification.
In the short term, we will respond closely to any shifts in the market demand, while at the same time utilizing our existing capabilities to focus our full efforts into preparing for EV transition in the long term by establishing EV competitiveness. In this part, I'm going to discuss how HMC will secure profitability during the slowdown in the EV transition, and how we will respond and establish top-tier leadership to prepare for transition to pick up pace again.
With the recent slowdown in the EV transition, the demand for hybrids has been picking up, with hybrids now being seen more as a basic choice of vehicle rather than a placement for ICE. The hybrid system, TMED, which HMC developed in-house, is leading the hybrid market. The next generation hybrid system, which will be deployed starting January 2025, features the great improvements to performance and fuel efficiency, and possesses top global competitiveness, and this is TMED-II.
The hybrids we have set to release in the future have even greater marketability, featuring hybrid specialized premium technology, such as smart regenerative braking, V2L, and more. Building upon our hybrid competitiveness, we are looking to expand our hybrid line past the sub-midsize and midsize segments, to which they had been limited to include compact, full-size, and luxury segments, and the expansion of our existing seven models to 14.
We are looking to respond to diverse customer needs, which means hybrid version of not only Hyundai brand models, but luxury Genesis brand models as well, with a hybrid option to be offered for all Genesis models, excluding dedicated EV models. So the expansion of HMC's hybrid lineup is connected to our plans to significantly expand our hybrid sales, with a sales target of 1.33 million hybrids in 2028, a more than two-fold increase over our sales plan from the previous year.
We made a large upward adjustment to our hybrid volume to 690,000 for the NA market, in which demand for hybrids is expected to grow consistently to 2023, and are planning to expand sales in line with hybrid demand in Korea, Europe, and other regions.
To make this possible, we are actively utilizing our key global hub plants and have established mixed model production systems and component supply chains through our hybrid launches. At HMGMA as well, which was established as a dedicated EV plant, we are planning to produce hybrid vehicles. In doing so, our goal is to respond quickly to the shortage of hybrids in the NA market and then improve our plant uptime. Our second plan to respond to the EV transition slowdown is extended range EVs, EREVs.
As of late, as the EV transition has slowed, there have been predictions that decreasing EV sales will be insufficient to respond to ever stricter automobile-related environmental laws, and at the same time, many consumers are thinking twice before purchasing an EV due to concerns over charging and more. EREV is a vehicle that can become an answer to this, which introduces the advantages of both internal combustion engines and electric vehicles. It operates only with electricity, like EVs, but when the power is low, the engine charges the battery to provide a much longer range than EVs.
HMC is developing a unique new PT/PE system for our EV... EREVs, which combine the strength of an ICE and EV in one, enabling four-wheel drive with two motors, which our competitors have not accomplished. In other words, since EREVs do not use their engines to drive, they are considered the same as EVs by NA environmental standards, and on top of that, they are favorable compared to hybrids and plug-in hybrids regarding greenhouse gas restrictions, which gives them even better business viability when it comes to regulations.
EREVs have a range of up to 900 km on full charge and can be refueled with electricity and gas at the same time to reduce charging stress, overall lightening the burden on the drivers and acting as a key stepping stone to bridge the gap in the EV transition. In addition, to provide reasonable prices, most of the existing engines have been used, and by reducing the battery capacity, which takes a big portion of the cost to 30%, we are able to secure better price competitiveness compared to same in-class EVs.
Even compared to plug-in hybrids, our target is to develop a competitive selling price, especially in the U.S. By providing the unique driving value that had been limited to EVs to EREV customers, we are enabling them to smoothly transition to an EV purchase as EV demand recovers in the future. The aforementioned EREVs, the mass production in NA and China, is planned to take place by the end of 2026 and to go into sales as of 2027.
In NA, Hyundai and Genesis brands' D-class SUV models will be deployed first to respond to the remaining demand for internal combustion engines, and mass production will begin in 2027, with the sales target of over 80,000 units. Meanwhile, in China, where price competitiveness is important in eco-friendly car markets, economy C-class platform will be used to sell more than 30,000 units, and for other regions, we will consider further expansion in line with regional market conditions in the future.
Likewise, while responding to the EV transition slowdown with hybrids and EREVs, HMC is planning to begin expanding our EV lineup by 2030, in line with the demand recovery forecasts. Specifically, we are planning to launch 23 new models by 2030 to provide consumers with a wide variety of options, including a full line of EVs from economy to luxury and high performance, giving them more choices.
So far, HMC's IONIQ allowed us to solidify our position in the EV market, and the motorsports heritage, which we have accumulated through internal combustion engines, was leveraged to launch N brand's first high-performance EV, IONIQ 5 N.
This high-performance vehicle, which can complete the Nürburgring circuit twice, not only provides the joy in driving, which still is yearned in the era of electrification, but is also an integration of Hyundai Motor's advanced electrification technology, including a motor system that greatly enhances performance, a high-power battery, and an innovative battery heat control system. Based on such superior electrification technology, HMC will provide an even more complete and safer EVs.
Our luxury brand, Genesis, will also have its EV lineup expanded to continue the luxury brand value that have been secured in the ICE market. In addition, starting with GV60 Magma Concept, unveiled in New York last March, we will unveil a new chapter of high-performance luxury that maximizes quality and performance. Next, I would like to share our EV sales plan. In line with the delay in the EV transition, in the short term, HMC will respond to the market with hybrid and EREVs, but will maintain the 2 million EV sales goal for 2030.
The transition delay will push back some EV launch dates, but with better product value and price competitiveness, we will flexibly manufacture and sell better EVs, so that when the electrification trend accelerates, sales plan can be modified accordingly. In the ICE era, it took nearly a hundred years for cars, car brands to expand into luxury and high performance. However, in the era of electrification, HMC is a leading brand that has delivered all lineups, spanning from popular brand models to luxury and high-performance models at the fastest rate.
With a history of top-level technology accumulated over the years and bold initiatives for innovation under our belt, HMC will continue to be prepared for the upcoming electrification era and lead the EV market. Next, our Head of Hyundai Motor North America and Global COO, President José Muñoz, will present details on the strategic directions of Hyundai Dynamic Capabilities. José?
Good afternoon, everyone. I often say it is a great time to be at Hyundai, and I mean it. Our Executive Chair has laid out a compelling vision for the future of how people and goods will move: more sustainably, safer, and more efficiently. This includes cars, commercial vehicles, autonomous driving, robots, EV tools, and while continuing the transformation to electrification and developing a hydrogen economy.
On the car side of the business, Hyundai is on a roll globally and in North America. The company is delivering beautifully designed, high-quality, safety-focused, eco-friendly vehicles with technology that customers want and value. From design, R&D, manufacturing, sales, service, our dealers, and our suppliers, there are so many women and men working hard to deliver value to our customers.
For Hyundai and Genesis, we are targeting 5.55 million vehicle sales by 2030, an increase of over 30% compared to sales last year. As a result, Hyundai Motor Group is now the third largest automaker in the world by sales. Our team has helped deliver incredible performance and growth over the past five years and have even higher ambition for the next five years. As you know, Hyundai Motor Group is an engineering powerhouse, and we are leveraging the full capabilities of the group to drive the car business.
As we continue to grow in regions around the world, it is increasingly important to localize vehicles to meet specific customer tastes and comply with regulations. Therefore, we continue to empower our regional organizations with a broad set of initiatives to deliver on our ambitions. North America, where we continue to grow, is a great example of how we are doing this successfully. Firstly, we remain committed to the dealer model and will continue to strengthen our relationships as we continue our fewer, bigger, better dealer network strategy.
For customers, we are continuously introducing new financing and ownership models, new incentives, as well as improving our digital experience to attract customers. We are localizing our product lineup with features and design relevant for local markets. This includes ICE, hybrid, and electric vehicles. We are also localizing our manufacturing footprint where needed and optimizing our inventory distribution to better regional demand. We continue to innovate our marketing and new mobility offerings as well, and last but not least, we are bringing in strategic partners to accelerate our growth and capabilities.
Across the world, we are engaging in a number of initiatives to strengthen our position in key markets. In North America, we are continuing to push the boundaries on vehicle design and the price competitiveness. Hyundai has six of the top ten most fuel-efficient EVs in the market and hit new sales records for the IONIQ 5 and IONIQ 6, which has led to Hyundai and Genesis capturing 11.2% share of the US EV market. Our success is not only limited to battery electric vehicles.
We are focused on offering a broad portfolio of electrified options for customers, and our HEV sales saw a 42% increase in Q2 versus the year prior. In Europe, we remain steadfast in our commitment to our dealer network and continue to explore initiatives to strengthen our collaboration. We have established a new sales entity in Sweden based on regional demand and will continue to expand our sales organization. As we invest in our dealers, our dealers continue to add tremendous value for us. We are very pleased to have reached dealer exclusivity with over 90% of our network.
While we are laser focused on the important profitable markets in North America and Europe, we are also focusing on key growth markets in the Middle East, South America, and Asia. In South America, we are regionalizing our product lineup, introducing new ownership models, and most importantly, unifying our dealer network. We have merged our dealers into a single network, each with access to Hyundai's full lineup of vehicles. We are harmonizing our technology systems across the network, from sales and delivery, warranty management, and customer care.
In the Kingdom of Saudi Arabia, we have partnered with the Public Investment Fund to build a new CKD plant with 50,000 production capacity for Hyundai vehicles, starting with the Kona and IONIQ 5. We are in construction today and plan to start production next year. In Asia, we have established a new regional sales office in Vietnam and a breakthrough go-to-market strategy in Japan. I would like to highlight our new battery plant in Indonesia in partnership with LG Energy Solution.
We are localizing our supply chain and strengthening resiliency in the region to serve our various manufacturing facilities in India, Indonesia, and Singapore. To achieve our sales target of 5.55 million units, we are adding 1 million units of additional production capacity by 2030 through the establishment and expansion of new manufacturing facilities. To continue to lead the transition to electrification, we are opening Hyundai Motor Group Metaplant America in the U.S. this year, and a dedicated electric vehicle factory domestically in Ulsan by 2026.
Additionally, to strengthen our footprint in growth markets, we have acquired a facility in Pune, India, which is set to commence operations next year. This will add an incremental 250,000 units in India. Furthermore, we will maximize the utilization of facilities in China and Indonesia and actively pursue market expansion through our CKD business in countries across the Middle East, Asia Pacific, and other regions to increase our market share.
We opened Hyundai Motor Group Innovation Center Singapore as a testing ground to explore new possibilities in advanced manufacturing technologies and processes. We embed smart manufacturing with the use of robots to automate assembly and logistics throughout the production line. We set a new benchmark in sustainability with over 2,600 solar panels on the rooftop that generate 1.8 gigawatt hours of renewable energy annually.
HMGICS is also customer-centric. There is beautiful Skyt rack Lounge on the roof, where visitors can test drive our IONIQ vehicles on our rooftop track. Hyundai's production system embraces continuous improvement at its core, and the best practices from HMGICS are transforming the way we produce our products globally. Our new operations in Singapore and Georgia are only the beginning of how we will introduce new manufacturing technologies globally. Singapore is our first phase, where we are developing and testing the most innovative production techniques.
HMGMA is our second phase, where we are applying our proof of concepts from Singapore and scaling them to accommodate the volumes of HMGMA. From assembly automation, robotic logistics, and intelligent technologies, we are adopting over three-quarters of our innovative technologies from our Singapore facility. These manufacturing innovations are yielding exceptional results. Compared to our existing facility in the U.S., our new HMGMA plant increases automation, expands our mixed model production capability, and improves plant productivity by 20%.
Finally, we are applying best practices in quality, safety, delivery, sustainability, and efficiency to all of Hyundai's manufacturing facilities. One very exciting development in North America is our new manufacturing facility, Hyundai Motor Group Metaplant America. We broke ground in October 2022 and began construction early last year for our new metaplant facility that will be home to all of Hyundai Motor Company's brands, Hyundai, Genesis, as well as Kia.
HMGMA will have a capacity of 300,000 up to 500,000 vehicles per year and will produce our award-winning IONIQ 5, as well as our highly anticipated brand new three-row, fully electric SUV, IONIQ 9. This state-of-the-art facility is employing the most up-to-date manufacturing technologies designed to maximize quality, safety, reliability, and efficiency. As I often say, it is not easy building cars and doing it profitably. We have one foot in the present and another in the future.
Hyundai Motor Company is committed to staying at the forefront of the automotive industry by leveraging the resources in the group and collaborating strategically with other global leaders. We are innovating across our core car business and throughout the mobility space. Leading automotive, Hyundai is on a roll.
Every part of the value chain is doing well and contributing to our success, from design, R&D, manufacturing, marketing, sales, and service, as well as our supply chain. We are pioneering new, more efficient manufacturing technologies in Singapore and at our new facility, HMGMA, in Georgia. In mobility, new business and services, hydrogen energy is a key focus area of Hyundai. Through a strategic partnership with H2 Energy and Veolia, we aim to accelerate the development of a comprehensive hydrogen ecosystem.
To enable our digital transformation, we are actively pursuing cloud service partnerships to leverage the strengths of Hyundai Motor Group. Furthermore, we are exploring opportunities to reinvent the customer experience through technological collaboration with Amazon, including the potential to expand our sales channels. Reimagine capital and finance. We have the best partners in the business and great relationships with them.
We are collaborating with global banks like Santander, Société Générale, and BNP Paribas to offer enhanced payment options and convenient financing for our customers globally. I hope it's clear that we have a very informed point of view about the future of mobility, and that we are leveraging best-in-class partnerships to achieve our vision. Thank you very much.
Next, Senior Vice President Chang Hwan Kim from the Electrification Energy Solution Tech unit will give his presentation on HMC's battery solution technology.
Good afternoon. This is Senior Vice President Chang Hwan Kim from the Electrification Energy Solution Tech unit. I would like to brief you on HMC's battery strategy. With the advancement of the electrification area, differentiated battery technology and development capabilities are becoming ever more important for global automakers.
Batteries have a big impact on cost competitiveness, as they take up the largest proportion of EV costs and are extremely important in terms of safety, such as the prevention of fire risks. Hyundai Motor Company, for the past 20 years, have developed eco-friendly cars and have been able to provide our customers with safe and convenient way to use EVs, while also providing a competitive battery solution.
We believe that electrification is something that is coming, and we must prepare for it. To overcome the recent EV chasm and to open an electrification era, we want to continue strengthening our battery competitiveness. Especially, the safety of battery system is critical, and at the end of my presentation, I will give you more detailed information on our battery technology for a safer EV. First, please allow me to explain on what path we have taken to internalize our battery development capacity. HMC does not make our own battery.
However, we know the customer value, safety, and functions needed for eco-friendly cars, how it must be designed, and how it must be used. This information we know much better than the battery producers, and we are continuing technology innovation in this area.2006 , HMC launched Verna Hybrid and have applied the hybrid battery for the first time. Three years later, in 2009 , compared to our competitors, a differentiated hybrid performance was deployed, and as the first car OEM, we have added the lithium-ion battery to our Avante Hybrid car.
At that time, competitors were very hesitant in applying lithium-ion batteries. However, we continued our efforts with Korean battery companies and have improved the battery system performance to 60%, achieving mass production. This really shows the persistence and the spirit of challenge of HMC and allowed this result to happen. Since then, HMC's passion for EV and battery development had begun.
Afterwards, we have mass-produced various hybrid models, and to secure price competitiveness of batteries, we have additionally nurtured Korean battery producers and a lot went into EV development by collaborating with overseas battery suppliers as well, so that we can diversify our sources while also having a secure and competitive supply chain. Based on such efforts, in 2021, we have applied our first dedicated EV, E-GMP platform to IONIQ 5.
And based on the battery technology that we have accumulated, as well as collaborating with battery companies, we have achieved the fastest charging speed to 18 minutes of the global car OEMs. Based on such developed capacity, the Santa Fe Hybrid, which was launched last year, we have added the hybrid battery cell, which we have self-designed and of-...
We're able to meet the function, cost, and durability goals that is needed for the battery system for hybrid SUV cars. Likewise, you can see that to achieve consistent leadership in the future, we are accelerating the research for batteries for new generation. Here is the Uiwang R&D Center, and soon we are going to open a next generation battery R&D center. They will be looking into solid-state batteries, as well as next generation battery development.
As mentioned before, based on a long time history of battery development competency and efforts, we are now able to timely respond to various market and customer needs, and we are the only global OEM where we have a diverse range of batteries from 48v- 800v , that can go into passenger cars and commercial vehicles. We have a full lineup of battery systems.
Furthermore, battery cells, modules, pack, and BMS. In these areas, we have widened the technology gap to provide differentiated eco-friendly cars and performances. A key example of this would be the differentiated battery cell and performance, as well as the cooling and control technology of the battery system, which showed that the IONIQ 5 N could be run two rounds of Nürburgring circuit in Germany without any drop in the performance. To overcome the current EV chasm, we must have our own competitive battery solution to meet a more diverse customer needs than now.
And to enable that, and to achieve price competitiveness and performance, we need a cost-effective battery cell chemistry and diversification. The current performance NCM battery and low-cost LFP battery. Not only that, but mass NCM battery must be newly developed, so that by 2030, we can provide diverse range of solutions.
Of that, volume EV will be using a new mass NCM battery, where it will be 10% less in terms of cost, but also have the same energy, density, and performance of the existing NCM battery. And you will see that this will now become a mass EV in the future. Furthermore, the optimized battery CTV that we have, the so-called cell-to-vehicle structure, will also be applied.
From the CTV structure, battery and body will be integrated to lower the number of parts, and the battery integration will be improved, so that compared to the previous CTP system, the weight goes down by 10%, and the material cost, excluding cell, can be improved by 30%. In addition, we also need to sophisticate our cooling technology, and other new technologies will be developed, so that we can provide EVs to our customers with the best battery solution that is mounted to overcome the current chasm.
Next is the battery safety, which is the big issue these days: how we are going to enhance our battery safety technology. HMC is aiming to develop a battery system that does not have any fire risks. Recently, battery producers have made significant development in terms of quality and process, and now making battery cells in various new techniques. However, if there is a problem with the cell, we will be conducting pre-diagnosis of the BMS so that accidents can be prevented.
The BMS technology that is applied to our EVs will be run not only during driving or charging, but also when the engine is off, so when the car is stationary, so that any anomalies can be detected in the cell, and minor short circuits will be detected, and the diagnosis algorithm will be applied so that potential defects can be prevented early. Any defects or anomalies detected will be shared with the customers through text messages. Such sophisticated BMS will be monitoring the health state of the battery while also predicting the battery life.
Based on the AI model in the future, we'll also have a more accurate prediction of how the battery life can be managed. Next, I would like to explain on the system safety structure. For various reasons, if for some reason, a fire does happen from the battery cell, it's important that the heat is not transferred to other cells. HMC's battery system, regardless of the cell's form factor, emergency events, fireproof materials, and heat transfer prevention structures will be applied, so that even if there is a fire, the flame exposure can be delayed as much as possible or not exposed at all.
Now, our efforts on such battery safety technology is something that have been built since our ICE era, and is part of our efforts to ensure that quality comes first. We will not stop here, and in the future, we will ensure that we provide the safest car to our customers. Thank you.
Next, our Head of AVP Execution and Head of the Global Strategy Office, Executive Vice President Heung-soo Kim, will take the floor. Good afternoon.
I'm EVP Heung-soo Kim of GSO. In the second part of Hyundai Way, we will discuss the mobility game changer strategy that embodies Hyundai's software transition technology, strategy, excuse me. HMC will continue to improve its products and services based on software and AI, and lead the change in the mobility ecosystem by focusing on developing software-defined vehicles and various new mobility projects. HMC is advocating for a transition in its development system towards SDV by incorporating software development methodologies into vehicle development.
The key to SDV is as follows: First, would be the development of hardware devices that can collect various internal, external data from vehicles, and secondly, the overall control of the vehicle interface based on software. HMC will ultimately transform vehicles into learning machines that autonomously learns and improves the integration of AI, utilizing data collected from SDV vehicles.
This will improve driving, safety, and convenience functions even after purchasing the vehicle, as well as continuously giving an update to the new app services to improve usability, while also connecting all your daily movements seamlessly. Furthermore, HMC is building a data infrastructure that can create, collect, and utilize large-scale data in various fields by connecting fleets, logistics, and urban transportation infrastructure to SDV devices.
Based on AI and digital twin technologies, we will efficiently manage the real-time fleet operation and traffic conditions of various mobility, and continue to advance cybersecurity technologies to develop safer and more reliable connected services. In addition, we will create an SDV ecosystem by working with third-party developer, SDK, and app markets, so that various IT developers and mobility service providers can develop various services using HMC's data infrastructure.
HMC is developing a high-performance vehicle computer-based zonal E/E architecture for SDV devices, optimized in terms of control, communication, and power. This architecture simplifies existing complex vehicle structures, reducing development time and cost, and increases software modification range, enabling faster service and functional improvements and deployment. In addition, we will develop a next-generation infotainment system and an open ecosystem designed to create a user-centered environment.
This will encourage more people to spend time in their vehicles, facilitate the creation of additional services, and enable more connections to be made. To this end, we are implementing Android Automotive, which has already secured many users and developers, and developing center displays with various proportions to meet customer preferences. We are also developing our own Android-based open OS and in-vehicle app marketplace.
In addition, we are enhancing and upgrading features that assist drivers by providing safety and convenience through interactive AI, powered by a large language model. In addition, we are developing various connected service apps that cover the entire mobility lifestyle, such as charging and parking, based on vehicle data. Next is the strategy on the advancement strategy for autonomous driving technology. HMC is enhancing its technology with a primary focus on safety in the development of autonomous driving technology.
First, we will establish a system that continuously learns with AI models automatically and simultaneously collecting autonomous driving data. As the scale of data increases in the future, we will enhance the implementation of a safer and more advanced autonomous driving technology.
In addition, developing a computing system that safely controls autonomous vehicles under any circumstances, is also a key element in the development of a safe autonomous driving technology, and to this end, HMC is developing autonomous driving computing hardware with stability and reliability, such as functional safety and redundancy. In this regard, we are focusing on developing an end-to-end deep learning model that performs cognitive judgment control and will expand it to a global solution that can be extended from Level 2+ to Level 4 in the future.
In addition, HMC is enhancing its internal capabilities to develop key components of autonomous driving, so that the company remains committed to providing a safer and improved experience for both drivers and pedestrians. By integrating all technologies and related to automobile, including autonomous driving and smart factories, into a single software platform, we will accelerate innovation in vehicle software and progressively enhance SDV. Currently, the controller OTA function is integrated into the vehicle to continuously enhance its quality and marketability.
Starting in the first half of 2026, the next generation infotainment system, based on AAOS, will be gradually implemented in mass-produced vehicles. This initiative aims to create an environment where HMC's customers can conveniently access a variety of AI services. Also, in the second half of 2026, we will launch the SDV-based car with the HPVC-based electric and electronic architecture, currently under development, to realize faster and more stable autonomous driving and AI functions, and demonstrate new mobility services and businesses.
From now on, we will expand our SDV full stack software technologies to all models, so that we can provide a moving experience that continuously improves and enhances in all models of HMC. Now, I'll move on to the new business deployment plan. HMC plans to launch a foundry business that sells autonomous vehicles to various global autonomous driving software technology companies by utilizing its hardware development capabilities and manufacturing competitiveness.
Our company has extensive experience in developing self-driving vehicles through collaboration with Motional and is expanding its partnership with various global leaders in autonomous driving to enhance the development and manufacturing capabilities of the world's leading autonomous vehicles. HMC intends to create a shared space that is crucial for the implementation of Level four or higher autonomous driving as a platform. Additionally, it will provide autonomous vehicle platforms to global developers of autonomous driving software.
Ultimately, by leveraging the capabilities gained through collaboration with various global leaders in autonomous driving, we will continue to enhance HMC's autonomous driving technologies and generate profits by expanding our foundry business, utilizing the established autonomous driving autonomous vehicle platform. The autonomous vehicle service will expand into the global market, emphasizing Motional's cutting-edge autonomous driving technology.
First, we will enhance our business experience and technical skills through operations in NA by leveraging the IONIQ 5-based second-generation robotaxi platform. This initiative will enable us to develop the third-generation robotaxi platform and optimal models to expand our robotaxi service area into the global market.
In addition, we will create a sustainable R&D environment and diversify our profit models, including sales, delivery, and advertising of Level 3 solutions. This will be based on our advanced capabilities in Level four autonomous driving technology, allowing us to adapt flexibly to changes in the autonomous driving market space. Thank you.
Executive Vice President Ken Ramírez will make a presentation on the energy mobilizer strategy.
Good afternoon, and thank you for joining us today. My name is Ken Ramírez, and I am the head of Hyundai's Global Commercial Vehicle and Hydrogen Business Division. It is my honor to present to you today Hyundai's pioneering efforts towards the global hydrogen energy transition and how we are uniquely positioned to lead the rapidly growing hydrogen businesses across the entire value chain. In 2021, Hyundai Motor Company announced our vision to achieve net zero by 2045.
Our goal is to become carbon neutral across all stages, and an integral part of this journey is our expanding adoption of hydrogen energy solutions well beyond transportation. Hydrogen is an efficient, clean, and sustainable energy carrier. A hydrogen fuel cell emits only water while producing electricity, and hydrogen is uniquely versatile, used as an energy storage and in a variety of applications, including mobility and industrial use cases.
As the most ubiquitous and abundant element in the universe, hydrogen is all around us in many forms. Producing it as H2 molecules can be derived not only from water electrolysis, but also from such organic waste and even plastics. It helps ensure energy security, so hydrogen is also fair by mitigating energy imbalances from geoeconomic disparities.
This is one of hydrogen's true societal values, that it's more inclusive and available to regions where other energy solutions are less accessible, and it leverages renewable energy sources that would otherwise be underutilized. All of these attributes make hydrogen a key factor towards achieving carbon neutrality, resulting in an increasing hydrogen demand for the global energy transition.
According to BloombergNEF report, the global hydrogen demand will continue to steadily mature, growing to well above 100 million tons by 2030 and nearly 400 million tons by 2040, with clean hydrogen taking a significantly leading role and a sharp growth in the overall demand. Hyundai has long held the conviction that hydrogen would be a key pillar for a sustainable society, starting with mobility adoption. For almost three decades, Hyundai has been at the forefront of the hydrogen mobility momentum.
Ever since we initiated hydrogen fuel cell research and development in 1998, we have achieved many firsts, including the world's first mass-produced fuel cell electric vehicles, most notably the ix35 fuel cell passenger car and the pioneering Class 8 heavy-duty truck, XCIENT, all equipped with our very own fuel cell system. Hyundai is uniquely positioned as a key player across the entire hydrogen value chain, thanks to the broad competencies of our affiliates within the group. This is reflected in our HTWO brand. The HTWO logo neatly encapsulates the Hydrogen for Humanity message with two interlocking H's.
HTWO conveys our conviction that hydrogen is the key to a cleaner future for our society and generations to come. Hyundai's bold identity as an energy player builds upon this core as a mobility company. Our unmatched cross-industry capabilities across the value chain positions us uniquely as a global energy transition leader beyond being a mobility off-taker. Hyundai is like no other energy company, with roots deeply grounded in mobility, and like no other mobility company, with branches so far reaching into energy sectors.
This synergy of mobility and energy results in what we call H2 Grid, which leverages the vertically integrated group's capabilities across various industries. H2 Grid illustrates Hyundai's comprehensive presence and demonstrates why Hyundai is uniquely able to deliver true end-to-end solutions across the whole hydrogen value chain, from upstream to downstream, from production to utilization. Upstream, we develop pioneering production methods in converting biowaste and plastic waste into clean hydrogen, while also effectively disposing waste, thus creating a double positive effect.
Our waste-to-hydrogen facility is already in operation in Chungju, where we process biogas from local food waste to extract hydrogen through our unique process. And by the end of this year, we will have another facility running in Chungju, using sewage sludge to produce hydrogen. Beyond Korea, we are building overseas facilities in Poland and Indonesia as well, where the waste-to-hydrogen solution presents a unique opportunity for local needs. Yet another truly groundbreaking solution leverages our advanced plastic-to-hydrogen technology.
Around 90% of plastic waste is not recyclable, but Hyundai has patented a process that enables us to produce hydrogen from non-recyclable plastic, also a part of our commitment to the global hydrogen society. Moving downstream to commercial vehicle applications, we have already successfully deployed over 1,000 fuel cell buses and nearly 150 fuel cell trucks globally, including a fleet of 30 XCIENT fuel cell trucks for the NorCAL ZERO project at the Port of Oakland in California last September.
Operated by Glovis America, the fleet delivers zero-emission logistics for real customers and represents the single largest commercial rollout of Class 8 hydrogen-powered fuel cell trucks in the U.S. Such port logistics operations serve as a catalyst for the expansion of port decarbonization worldwide, not only at cargo and marine ports, but also at airports. For example, we are deploying hydrogen energy systems at the Incheon International Airport, forklifts, and shuttle buses. On the business front line, our HTWO brand sponsors a groundbreaking new business.
As announced at ACT Expo earlier this year, together with Hyundai Glovis, our logistics affiliate in the U.S., we have created a pioneering joint venture called H2 Logistics to deliver the first clean logistics business, starting operations this fall at the new Hyundai Motor Group Metaplant America in the state of Georgia, the group's first dedicated electric vehicle mass production plant.
The H2 Logistics fleet of Class eight XCIENT hydrogen-powered trucks will manage roughly half of all the logistics and complete an end-to-end hydrogen ecosystem to reduce the carbon emissions around the new production facility. We are also decarbonizing logistics needs as well. Hyundai Steel Ulsan Plant already has XCIENT trucks in operation, with plans to implement additional trucks between Pyeongtaek Port and Asan Plant by the end of this year in Korea.
Finally, our H2 fuel cell system, the initial impetus of our HTWO brand and the driving force behind Hyundai's pioneering efforts in hydrogen, is also expanding its scope to lead the acceleration in hydrogen, hydrogen adoption. We are widening our lineup of fuel cell solutions for growing diverse applications in both mobility and energy, including trams, marine and air mobility, stationary power, industrial equipment, and more.
Our HTWO brand started with fuel cell systems and will continue to keep that core as the brand broadens to boundaries of hydrogen adoption. HTWO will lead Hyundai's expansion into wide hydrogen value chain businesses, and Hyundai will be the catalyst to the world's hydrogen energy transition. We will accelerate the development and implementation of the entire hydrogen ecosystem by providing both the infrastructure and the applications. We are living in a historical moment that is shaping our world to become more sustainable and transform the way we live, work, and power our society.
A hydrogen society is already a tangible reality, and the hydrogen industry is rapidly expanding. Hyundai is proud to have been among the pioneers and to now be uniquely positioned to lead the global hydrogen energy transition. Our mission has always been clear, and we are more committed than ever to pushing the boundaries of innovation and technology that will benefit our lives. That is progress for humanity through hydrogen. Thank you.
That brings us to the end of the strategies. We will now turn to the finance part, which will be explained by SVP Seung Jo Lee.
Good day. I'm Seung Jo Lee, the SVP of the Planning and Finance Division. How did you find the Hyundai Way strategy? I hope it gave you a better understanding of our strategy. Now, let me begin with our finance part. I will walk you through our mid- to long-term investment plans for the Hyundai Way strategy, mid- to long-term profit targets to achieve through that investment, and the value program based on those profits.
Also, for HMI IPO, which many of you could have keen interest in, we will first touch upon the mid- to long-term investment plan, and then show a short video clip where our HMI CEO and COO will briefly address it. Let me start by talking about our mid- to long-term investment plan for the strategy.
At last year's CEO Investor Day, we announced our plan, KRW 109.4 trillion for the next ten years. But R&D investment for the next ten years will be KRW 54.5 trillion, CapEx, KRW 51.6 trillion, up KRW 4.5 trillion, and strategic investment, KRW 14.4 trillion. That is KRW 120.5 trillion in total. Today, at today's CEO Investor Day for our investors to better understand our future investment, let me elaborate on our three strategies mentioned today from an R&D, CapEx, and strategic investment point of view.
First, we'll invest KRW 92.7 trillion in executing the Hyundai Dynamic Capabilities strategy in hybrid and ERE V, which will serve as a bridge along the EV transition, and equipping EVs with the next generation modular architecture. To better respond to the chasm in the EV curve and ramp up our core electrification capabilities, we will invest KRW 37 trillion in R&D, KRW 50.8 trillion in CapEx, and KRW 4.5 trillion in strategic investment, so KRW 92.7 trillion in total.
Now that the curve of both market expectation and demand of EVs has changed, rather than preparing a single alternative, predicting EV market's future and demand, we look to flexibly respond to market demand via proactive investment in various products and PTs, and focus on the Hyundai Dynamic Capabilities for profitability. Moreover, to become a mobility game changer, we will invest KRW 22.1 trillion. Based on our hardware development capabilities and manufacturing competitiveness, we will invest in developing architecture for more sophisticated AV software technology.
In parallel, we will deploy our robotaxi projects with partners like Motional and 42dot, while investing in future businesses led by Supernal and BD to see more tangible progress. Lastly, we will invest our money, about KRW 5.7 trillion, in the energy mobilizer strategy to strengthen our hydrogen strategies and business capabilities, be it strategic investment and external partnerships for hydrogen value chain establishment.
So we plan for this to pave the ecosystem for hydrogen. That concludes our 10-year mid- to long-term plan. Through bold, proactive, and efficient investments, we'll achieve the Hyundai Way for innovation and bold steps. From the perspective of investment financing, we believe the IPO will set an example of tackling new challenges and pursuing innovation by leveraging the global capital market. Through the IPO in the global leading market, India, we seek to ramp up localization and solidify our leadership.
Going forward, through such IPOs in overseas markets, we will continue pursuing innovation for not just the local subsidiary, but also HMC to meet the global standards. Let me now walk you through the progress of HMI IPO. This past June, HMI filed a DRHP, a pre-offering memorandum, to the SEBI and held executive-level roadshows for 60 Asian and AMI institutions, 50 India institutions, and 40 NA and European institutions, so 150 in total.
Getting approval from the SEBI and relevant regulatory authorities, we aim to go public within 2024. We're also looking at the market situation. Thinking there could be a lot of questions regarding it, we have prepared a short video from our HMI CEO and COO. Let's have a look.
Namaste. My name is Unsoo Kim, Managing Director of Hyundai Motor India. I have spent more than 32 years at Hyundai Motor Company, including 20 years with various role on the global operations and sales. My primary role at HMI is to bring HMC's global best practices to India. It is my greatest privilege to share HMI's unique story with you. I am together with my colleague, Tarun Garg, whole time director and the Chief Operating Officer. Tarun will speak in more detail about our story, business, and the growth strategy in Indian market. Tarun?
Thank you, Unsoo. Namaste, everyone. My name is Tarun Garg, and I look after sales, marketing, service, channel, product strategy, customer relationship, brand, and media management functions at HMI. I'm thrilled to speak with you about the exciting Indian auto market and Hyundai's amazing success story here.
HMI has experienced a remarkable success in the Indian market with a strong parentage and the support from Hyundai Motor Company, and we will continue to do so with our clear right to win. Let us walk you through some of the key pillars of our success.
Our product, brand, manufacturing, and future strategy have always been the backbone of our growth. Let me explain them one by one to you. Product: democratize access through innovation, something for everyone. From India's first tall boy design, Santro, to latest premium EV IONIQ 5, HMI has consistently introduced innovative products to the market, ensuring unmatched choice for every customer preference and convenience. Brand: We're an award-winning brand with a demonstrated track record of leadership.
HMI has consistently maintained its position as the top two player despite multiple domestic and global OEMs entering the market. Manufacturing: flexible, localized, and automated manufacturing capabilities. We have a calculated and calibrated approach towards capacity expansion to capitalize on increasing market demand while maintaining a balanced mix of domestic and export sales. We also intend to develop our Pune plant as a highly automated and state-of-the-art plant. We are future-ready.
We're also consistently innovating processes, digital ecosystem, customer experiences, and technology, making us well-equipped for future industry evolutions. Moreover, with portfolio expansion and introduction of new EV models, we will continue to lead the market trends.
Apart from our operational excellence, I would like to underscore our industry-leading profitability and the strong governance. We have been consistently delivering growth at scale with industry-leading profitability and returns. We hold the number one position in mid-size SUV and the mid-high sedan segment with over 30% market share, far exceeding our peers. As of fiscal 2023, our EBITDA margin stood at 12.5%. Combined with the ROCE, 28.8%, we are at the top among our Indian peers in terms of profitability and capital efficiency.
Last but not the least, our exceptional performance is not a coincidence. It is a result of our seasoned leadership, having representation from India and Korea. Especially, I would like to highlight our outstanding board of independent directors, comprising of a prominent Indian professional. This concludes our presentation, and I hope you enjoyed our story. For the first time in its history, Hyundai Motor India is opening its doors for investors to join our journey in the exciting Indian markets.
Hyundai Motor India presents you with a unique and promising opportunity to invest in a leading player with strong global parentage in the Indian market. We shall stay committed to all the stakeholders of our company and endeavor to set new standards in the market.
Thank you for your patient hearing. Dhanyavad.
Thank you.
How did you find the video on HMI IPO? We will share further details with our investors once ready. When it's completed, I'm going to share more details. Let me now move on to the mid- to long-term financial targets to be achieved through the investment plan we said earlier. As noted in our annual profitability guidance for 2024 , despite the chasm in EV curve, by increasing high-profit hybrid volumes and responding to the market more flexibly, we aim to achieve 8-9% of our consolidated OP margins.
We'll continue our cost takeouts and improve EV profitability with improved product value, and by launching EIVs we talked about earlier. We'll also enhance the profitability of both EV and ERV on par with the average, achieving 9%-10% of our OP margins by 2027 . With our own hybrid, ERV, and EV differentiated from other brands, we'll improve profitability during the EV chasm, likely to be prolonged, while improving both average profitability and OP margins of each PT.
Through all this, by 2030, the profit levels of all PTs, namely ICE, hybrid, ERV, and EVs, will be close to the average, helping us improve profitability and achieve at least 10% OP margins. Although we can't fully communicate our profitability target per powertrain, we can say our profitability strategy in this uncertain margin is to sell competitive models of each PT and reduce profitability gaps, which-... I'd like to highlight to our investors in terms of mid to long-term financial targets.
To be fully prepared for different PT markets, overcoming the EV chasm, producing profits, and preparing for the future shift to EV based on the profits will be the best strategy, I think. Next, let me talk about our value program that many investors are likely to be interested in. Even before the government announced the value program, we have long strived to enhance our shareholders' and company's value. While consistently our shareholders' returns, we're now at an important time, being required to shift to EV, secure profitability during the EV chasm, and expand investment into the future.
Going beyond the investment ramp-ups, we'll proactively adopt the value up program to further provide returns for our shareholders. In 2017 , we took the first step towards more transparent and reliable investment, and until 2022 , we provided 30-50% of our free cash flow, ex-finance, twice a year as dividends. Going into 2023 , we have set the minimum 25% of our dividend payout ratio, paying quarterly dividends, and are on track to cancel 3% of treasury shares we have for three years under our shareholder return policy announced.
From 2025 , by reflecting the confidence in our fundamental improvement and the strong commitment of our BOD and the management to shareholder return expansion, we'll adopt the concept of TSR or total shareholder return, a sum of dividends and treasury stock buybacks and cancellations, and implement a value program, which includes achieving ROE targets, introducing minimum dividends, and setting the total amount of treasury stock buybacks.
Let me elaborate on the next slides. First, starting from the annual dividend for 2024 , we'll provide at least KRW 10,000 of dividends per share or DPS. Through this, we seek to return DPS stably to our investors, showing confidence in our fundamentals. Second, we'll clarify the objectives for future treasury stock buybacks. As you know, we often buy our shares for employee bonuses. Going forward, we'll distinguish buybacks for corporate value improvement and employee bonus separately, and then disclose the objectives at the time of buyback.
As for the former, you could interpret the premise as canceling the stocks we buy. Third, we plan to set a total share buyback amount of up to KRW 4 trillion that will cover common and preferred shares for the next three years. Considering annual TSR and ROE target, we will elaborate later. Within the total scale, we'll also set the scale per year for shareholder returns. Lastly, as for the plan for utilizing the cash from HMI IPO investors are highly interested in, we will share more insights later after wrapping up the IPO.
Next, let me move on to our value program for 2025- 2027. We will have at least 35% of TSR or total shareholder return, up 10% from the minimum 25% payout ratio announced previously. So we will include the 35% TSR, comprising total dividends and treasury stock buybacks and cancellations, in our policy. Within the 35% target, we will balance between payouts and stock buybacks and cancellations so that we could improve ROE beyond just one of shareholder return and continue enhancing shareholder returns within the 35% TSR target.
On the ROE improvement, we will look to increase the average ROE of three years to 9%-10%, and for 2025- 2027, to 11%-12%. Secondly, in line with the minimum KRW 10,000 dividend that I referenced earlier, from 2025, we will provide quarterly dividends of KRW 2,500, which is up 25% versus the previous KRW 2,000 per quarter.
With that, we expect to pay quarterly dividends evenly throughout the year. Moreover, we'll consider preferred share discounts before buying or selling treasury stocks going forward. We will reflect preferred stock discounts and make market situation while considering our TSR scope for the year, and then improve discounts under a flexible buyback and cancellation policy.
Lastly, we will base our value program on a profit-oriented strategy, aiming to achieve at least 10% OP margins in the mid to long term, which will be the foundation for shareholder return expansion. Through the program, we will achieve at least 35% TSR, 11%-12% average ROE for the three years of 2025- 2027, and continue enhancing our corporate value and shareholders' value as well. Working on the value program, we did our best to reflect our shareholders' and investors' voices and thought greatly about our best approach, not just in the HMI IPO.
We look forward to your continued interest and valuable feedback. That brings us to the end of the finance part. I will now turn it over to CEO Jae Hoon Chang for today's wrap-up.
Thank you for your attention. We've walked you through our 2030 future strategy and the financial strategy we will use to achieve it. How did you find the presentations we have long worked on? HMC will not be complacent with achieving the cumulative productions of 100 million, taking next steps towards another 100 million milestone going forward. As highlighted earlier, HMC will expand into various mobility sectors beyond auto manufacturing and into service areas that are linked to the businesses, so that we could cement HMC's presence as a mobility game changer.
While boosting our role as an energy business and realizing a hydrogen society, we'll continue to maintain the global top-tier leadership, even during a period of energy transition. Through the Hyundai Way, HMC has always pioneered new territories, taking bold steps and pursuing innovation onwards. On that journey, there has always been HMC's DNA, a courageous spirit and persistence.
That is our competitiveness and driving force. My belief in that is unwavering. I hope today you have gained insights about HMC's strategic direction and future visions. We'll continue to update the progress of our mid to long-term strategy we shared at today's Investor Day through various channels. I wish you all join the journey HMC strives to pioneer moving forward with much interest and support. Thank you for your time.
At this time, we'd like to arrange the stage for the Q&A session. We kindly ask that you remain seated during this time. Thank you. We'd now like to invite the Hyundai executives to the stage for a Q&A session.
Good afternoon. I'm the moderator for the Q&A session today, Michael Yoon. Today, I'd like to begin the Q&A session for 2024 CEO Investor Day. I'd like to start off by introducing HMC leaders who are here with us today from HQ for the Q&A session: President and CEO, Jaehoon Chang. GCOO, President José Muñoz. GSO and Head of AVP Execution Unit, EVP Heung-soo Kim, Head of Global Commercial Vehicle and Hydrogen Ve-- Oh, excuse me.
Head of Planning and Finance Division, SVP Seung Jo Lee, Head of Global Commercial Vehicle and Hydrogen Business Division, EVP Ken Ramírez. Head of Planning and Finance Division, SVP Seung Jo Lee, Head of Electrification Energy Solution Tech Unit, EVP Chang Hwan Kim, and Head of IR, EVP Zayong Koo. Let's jump into the Q&A session. Anyone with a question, please raise your hand.
And we would like to offer the floor to as many people as possible, so we kindly ask you to limit your questions to two per person, and please specify your affiliation and name at the beginning of your question. Furthermore, this year, we are opening the floor to investors who are not able to join us in person, but participating through YouTube.
Viewers joining us through YouTube, please leave your questions on the comments section, and we will try to answer as many questions as possible. We'll take the question from the floor first. Any analysts or investors, if you have a question, please raise your hand. ... Yes, in the check shirt, please.
Thank you for giving me the opportunity. I'm from J.P. Morgan, Kim Sangmyung. Mr. CEO, you mentioned on the eco-friendly car strategy, so I have a question on that. But before that, I'm sorry, I want to say thank you, because two years before, I got the IONIQ 5, and I'm driving it very well, so thank you for making a great car.
So the eco-friendly car strategy, EV and hybrid, I think it's already proven that your competitiveness is pretty high, and the demand, you know, is whether good or bad, it's, it's there. But for EREV, it's pretty new to us. So what is the potential of the EREV market from your point of view? I mean, is it just going to be a bridge, or is it going to be another pillar of demand? And from HMC's point of view, the mid to long-term sales and profitability, what role will EREV play in that?
So eco-friendly cars, our strategy, our overall strategy is connected to the overall ecosystem of the market, along with regulations. But as you are well aware, the EV chasm right now. I mean, I think there are two reasons. First is the transition. When it's pushed back, you know, what are we going to do, and what are we gonna do to bridge that gap? That is one part. And then we talked about EREV, so we gave you TMED-II, as well. So it really, I think it's pretty much an opportunity for us to buy more time to be better prepared for EVs. EREV, what role does it play, you asked.
EREV is very close to EV, but also overcomes and reduces the anxiety regarding EV, and I think that there are a couple of reasons for this. First, charging and fueling is done at the same time, which means that range and charging inconveniences can be overcome. Second is price. The cost is mostly taken by the battery, but the battery usage is about one-third, so 30% only. And yes, it does have an ICE, the engine, but it doesn't have a transmission. So if you look at the reference point, Japan is already gone into EREV, and EREV had already been done by GM before.
But the EREV that we are currently trying to do is joining hybrid and ICE, as well as EV advantages, all together, taking the good points out of that. This had been raised about one or two years ago, and we have been constantly developing this. The launch is targeted for the end of 2026, and we are confident that we are now to a competitive level, and the regulation will go towards the environmentally friendly front.
So I think that could also be a solution for us. It's different per region. However, in the future, while we push through with EREV, I think in the long term it could become another pillar of demand for us. As for profitability and mid to long-term sales, there is what we are primarily looking at by strengthening their product quality and the quality structure. I think it really has big potential to scale up.
Hybrids, that has shown us what it can do in terms of profitability, as well as the EV, product qualities, are both considered. But to secure competitiveness, we are doing the best that we can. Thank you.
Thank you. Next question, please.
Yeah, right on the front. ...
Hello. Thank you for your explanation. This is from Samsung Securities. This is Eun-young Yim. I have two questions. First is on hybrid, the other is on ROE. Regarding hybrids, we do have our own in-house technology, you said, and we have shown great performance so far. In the market about hybrid, there's much interest, and as you said, because of EV chasm, hybrid demand is likely to grow more than expected. So going beyond applying our own technology to our products, do you have any plan for licensing, or do you have anything you're now working on?
Or in fact, US companies or European companies, because they do not have hybrid technology, is there any possibility for collaboration? That's my question. The reason why I ask this is, in the market with your own exclusive market, it could help improving MS, and that is to scale up the ecosystem, which is a bigger premium. So my question lies in the possibility there. My second question is about ROE target, which you explained for the first time. So out of a lot of targets, do you have any priority in ROE? If it's a top priority, already your profitability is very high.
Through that, ROE is not likely to go up, I think. Like asset issues, for example, HMC's ROE is low because finance parts is a big chunk. Yeah. So finance chunk is large, that's why, as said, cycling rate is very low. So about the finance ownership, is there any possibility it's likely to split between HMC and Kia? Do you consider this? It'll be appreciated if you answer.
Yeah, there is two questions. The first one is about finance, and the second one is about the financial structure. On that, yes, I hope the relevant teams could get back to you on it. As you said, hybrid technology equipped, like external sales or technology licensing on that, I think it's relative. For example, depending on OEM about eco-friendly cars strategy, some would have larger interest in PHEV or others, in EV or hybrid.
So in fact, after this EV chasm, in terms of strategy, I think there could be different opinions on that, so we can't say we do have possibility or not. Better than that, the thing is how competitive we are. On that, yes, I think there is possibility. So on that, through various channels, we do talk about it, but still, it's difficult to fully communicate that. I think shortly we will communicate that.
Of course, hydrogen energy is also included in it. On that, like leadership, cost, unit cost, performance, durability, on those areas, how well are we prepared on those areas? I think that's the key going forward. As for the ROE target, there are so many things that are intertwined. But about the relationship with Kia, sorry, I can't fully communicate on it. So yes, can you please answer?
Yep.
So as you asked, let me answer. For the first time, our ROE target was explained. As you know, ROE, of course, profitability is important, equally, the average asset. That's the denominator of it. So on that, yes, we are now putting our focus on that as well. So average resources, capital to reduce that, like whether it's like shareholder, I mean, a treasury stock buyback or cancellation, we're going to consider that more than profitability.
So about treasury stock, like buyback and cancellation, considering that, we're going to expand shareholder returns, and this is our commitment into it, as you said. So where do we put our priority about the preferred stock discount? In the market, yes, there are lots of concerns in the market on that because we do have a lot of discounts of preferred stocks about our company.
When we cancel our treasury stocks, instead of saying where do we put our priority within the TSR 35%, whether it's preferred stock discount or ROE, we're going to make a decision by considering that. As our CEO said about finance, we're working on auto manufacturing. That's a must, I think, with Kia. How? In terms of, like, ownership, distribution. At the moment, we can't talk about it, so my apologies.
Thank you. We'll take the next question.
Yeah, good afternoon. I'm from Citi Securities. So I also have a question regarding ROE and the shareholder return policy. So I think... I was very positive about Hyundai's approach, because even without the demand, you still push on with the market, get the feedback, and that leads to product quality, it seems. Before hybrid, at that time, there was no demand, but we kept on pushing hybrid and come out with better improvements.
Now we have a good hybrid. Same with fuel cell, we are taking the same approach. So I think once the fuel cell demand goes up, we'll also get benefit out of that, the efforts that we have made so far. Now, regarding EREV, we haven't really given this to the market yet.
So in theory, there is whatever R&D, so in the next year, the product will get better, and I'm gonna be better than competitors. So in theory, in theory, that may work. However, we don't know if that's gonna actually work in the market. So once the competitors go into this EREV, what, you know, unique competitiveness do we have?
Not just specific based, realistically. So what competitive differentiation do we have? Secondly, regarding shareholder return. The 35% TSR you mentioned, and you said that once the IPO for HMI ends, you will give an update on the cash flow. Because IPO is not something that's recurred, so this 35% TSR, after the IPO, if we are going to return with this cash flow, would that be included in the 35%?
Or because it's a one-time thing, will that be not included in the 35% and calculated differently? So, I think that's a very simple question. Thank you.
Regarding HMI IPO, our CFO and maybe IR could answer that. But for EREV, the benchmarking point, what is the competitiveness, and how long will it last? We'll have to see. But, you know, PHEV will be pretty much our competitor, and for the NA market, I think we need to stay focused on that market, because it will be considered on the same level as EV, get the same benefits in the NA market as EVs. And how much improvement we make in terms of pain points, you know, how longer range we can achieve and how much of economical benefits we can provide.
Furthermore, the efficiency, how less of a battery and heightened in terms of density can we go to have best output? So performance, customer convenience, is, I think, the differentiating factors. We already have a target set, and we are confident that we are competent. And how we need to look at the Chinese market because EREV is now overcoming PHEV, so that already is being played out in China. Because the engine plays as a generator, once the battery level is low, it will generate power and power the battery or the SOC, depending on what percentage.
You know, is there going to be a bit of a, you know, something that people feel uncomfortable with? So I think that's the point. So lowering the transition from charging to generating, I think that's the point. I understand there is a fine-tuning between the interested party, and I think we overcame that as much as possible. Do you have any comments to add in terms of technology?
When we say EREV, as the CEO has mentioned, in terms of technology, the various technologies that HMC had so far, it's nothing new. What we already have is being commonized and based on the data and experience, even if it's an EV, the EREV that we are trying to push with is something that's very different. It's meeting closely to what the consumers want. That is what we are confident with. The same with battery, the same with motor.
It's already using what we already have in the portfolio and provide a lean cost and performance to the market at an optimized level, having all that competency ready, because I think there will be a need on this. How this will evolve in the future, maybe that's a different story. 2028 and 2023-2030, how will the existing customers look at this and have their lifestyle incorporated in the use of EREV? And once that is identified, we could evolve our portfolio accordingly.
If I could elaborate, I think the point in the question was that because EREV is not completely new to the world, with what specific differentiator are you going to win? I think that is exactly what you wanted to know about. The CEO and Mr. Kim had elaborated, but all the technologies that we already have, especially the electrification portfolio, is something that all we have. So we are going to make use, full use of the factors that we have. Internally, we think the key is the controller, because we believe it's a very state-of-the-art control technology that's needed.
So it works as a generator, but to what level of interference-like interception it needs to take so that it gives the consumer a seamless driving experience. If you looked into the path that we have taken so far, the in-housing of the powertrain controller, the technology has been fully in-housed. And based on that, for almost a decade, we have looked into the chassis and the body. The controlling competency was something that we heavily invested in.
The products that we currently launch is where all these technologies are in-housed. And we explained before, but that is going to be now, developed in a software method. So the accumulated controller technology, I think is, would be the key. We are lowering the number of motors, and the reason that we can take a different path is because we have that confidence. One more that I want to add is that today-
... we just gave you an example of one product. However, internally, we are coming up with a lineup of how we can maximize this technology. So that technology, the product strategies will all come down to a single point, which will allow us to win in the market and get good feedback from the market as well as the consumers. We are pretty confident. And to do that, of course, there will be a lot of work required. However, expanding our portfolio is very meaningful us in terms of strategy, so we are really heavily invested in this, and we will make this happen.
About your second question, yes, we thought much about it. So this time, through HMI IPO, especially about the proceeds from it, we thought whether we could mention it or not. However, with the Indian SEBI, still, the pre-process has not been wrapped up yet. So at this moment, it's not proper to talk about it. That's why we didn't mention it yet. But the TSR 35% and the proceeds from the HMI IPO, that's a separate one.
Thank you. Let me take the next question.
Here. Thank you for taking my question. This is Jung, Yong-jin from Shinhan Securities. I have two questions. Most OEMs, our competitors, are faced with chasm, and they reduce CapEx investment. But unlike that, we increased our investment, as you repeatedly said, so that is to create more like new approach. In what parts do you see such an investment ramp-up? I want to know about it. At the same time last year, out of our 10-year investment plan, it should be about like KRW 36 trillion. I thought that was decreased.
Can you give us an update on that? My second question is on, for a long time, we have talked about SDV, and you're now working on it, but still, we don't have the product yet. That's why we do take it a little bit ambiguously. But so far, according to what you said so far, platform-wise, by locking in our customers, by working on our ecosystem, we could work on software-driven car, and you also shared launching time. However, one of the characteristics in the auto industry, the life cycle of product is large.
So even if we have the product, existing customers would use their own cars. So with the launch, SDV customers are not going to be accelerated in numbers. So in 2027 and 2028, when we have SDV product, the ecosystem, when do you think the ecosystem will be established? Do you have any plan for acceleration?
As for SDV, Mr. Song, please answer the question about the investment plan. Our CFO, please share your answer. I will also add some. SDV was announced early this year at CES. Development-wise, in late next year, 1.0 will be completed, and we will start SOP, and from 2026, we're going to do mass production. But fundamentally, SDV, electric and electronic architecture and software platform on that, as you said, user experience and in-car infotainment, I think you were talking about those points. So what we call SDV is vehicle awareness.
That's the center of it. So how to make our cars' power line, data line of the vehicles with the flow of the existing controllers at the moment, by function, we do engineer the controllers, and it's totally distributed. However, by integrating them all with a lot of data, 12v, 48v, we're now working to increase that in terms of power. At the same time, network bandwidth is very slow, and it enables AV, so such next-generation features throughout the life cycle, even after purchase, consistently should be improved.
So to include that capacity, we're now working on it. At the moment, our target is out of the overall controller. We are going to reduce the number of the overall controllers by half and high-performance computer, ECU computer, so we are going to make a shift in twin to reduce wirings. Good controllers will be installed, creating a hub, sensor hub. So wiring and actual controller architecture will be reduced in number. The point here is that so far, it is all based on signal in terms of communications.
But going forward, software will manage all the functions, which is a higher level. On that. That's the biggest change in terms of car making. We think SDV, OEMs, electric and electronic architecture will be changed totally, then how could we put that into mass production? That's a separate issue. So that's a dual-track strategy. First one is SDV P- car. It's scheduled for late 2026 in terms of launching, so we're going to start small lot production, go through verification, and make improvement before SOP. That's the current structure.
As you said, the second point is about UX. So far, CCNC and fundamental infotainment awareness. Aspect ratio, we're now working on, on Android or smartphone and tablet experiences. To give the experiences, most OEMs do have long vertical lines. So then what value could we have with it? Which is very tough. So connect a new infotainment.
It's scheduled for 2026. Before that year, we're going to start mounting it. So yes, we will mount it along with end market, whether it's new app or features. When they are created, we will need to create another new ecosystem. Next year, yes, we'll attract more developers for that establishment. But all vehicles... Well, it's going to take some time for the vehicles to be mounted with it. So by working on OTA, depending on the launch time, whether OTA is possible or not, we're now figuring out.
The thing is, a lot of things are now changing, so if you look at the vehicles launched, we can't promise they are going to have OTA. However, from 2025, they could have that feature. As for end market, we're going to kick off development from next year.
Now, regarding the SDV and app market, we also have our own UX and UI, which I think you elaborate. But the overall investment, just this year, has gone up by KRW 2 trillion from KRW 12.4 trillion. And of course, investment decision will be depend on, is there going to be a consistent profit or not? And will this be able to guarantee future growth? If those two are not guaranteed, how can this be sustainable? Of course, this is also something for us, but depending on internal discussion, we think it's the timing to go through with this.
The strategy in terms of investing in R&D, I think it's the time, and it may be a difficult time, but it's also an opportunity, increasing the CapEx, improving old facilities, investments will also be made. In addition to that, the new businesses like Motional or Supernal, as well as other urban flights, we believe that these are our future business areas. So creating that business is the key, and I think securing a drive for that is the key. So the next three years would be the key, and we are focusing on those upcoming three years. So anybody want to comment more on investment?
If I could simply add on, just to give you the numbers. For R&D, it is KRW 7.1 trillion, and for CapEx, it is a KRW 4.5 trillion increase. The increase for R&D is because of EREV or next generation hybrid system. That takes over KRW 1 trillion. As for CapEx, he mentioned that the optimization of the plants, especially Indian production plants, in line with IPO, we need to modernize the Pune plant as well.
So that was about three trillion. Excuse me, eight hundred billion. As for electrification, it's gone up by 30% to KRW 36 trillion. It's not much different to what we announced last year, so we will continue and maintain a 30% investment for electrification.
Thank you. Next question is going to be from YouTube. "So out of the existing dividend, TSR, total shareholder return concept has been introduced. What's the reason?" That's the question we got from YouTube.
Yep. As you know, our investors, of course, dividend is important. The total shareholder return has been mentioned a lot because it's linked with our treasury stock buyback and cancellation. So total return should be our basis, we thought, because of the requirements we got from many people. That's why, to that, we put our focus more because we thought it's very important, the total TSR. That's why we put our focus on it.
Thank you. Then this time, we're going to take question from here.
Hello, I'm from Hyundai Securities. Thank you for giving me the opportunity. I have two questions myself as well. First is regarding electrification. The hybrid car and the battery EV and EREV, so flexible productions, to cover all that, I think that would be the decoupling factor with your competitors. But some say that the traditional electrification, for example, the investment to supply chain and with the hybrid penetration going up, it clashes with the previous. So how is that being managed in terms of supply chain management?
Secondly is for Mr. Heung Soo Kim. I am interested in the service business model. After 2025 , the SDV, assuming that this becomes a success and is penetrated into the market successfully, we just have the definition of car as a device, but how are we going to expand it into the service model?
In what areas are you focused on in particular? And to build up an ecosystem, what strategies you have in planned? And I think the strategic investment portion has gone up, so will that be used for partnership or collaboration or acquisition?
Regarding hybrid electrification, so the cash in the investment, was that your concern? Was that your question? Okay. I think José can give an answer to that as overall COO.
Yes, I think I can put a concrete example, which is the Metaplant in Georgia. Right, so this plant, as you know, it was originally thought to be a BEV exclusive. However, we've seen very clearly a trend in the market demanding more hybrid. So, we decided to be flexible and then decided to introduce hybrid production also in our Metaplant. So this doesn't mean that all of a sudden, all the investment is significantly increased.
So we immediately discussed with the manufacturing experts and the process engineering, what could we do in order to make the plant flexible, including all the permit process, and very quickly came to the conclusion that with a relatively minor incremental investment, by adjusting the configuration of some of the parts of the plant, we could produce hybrid vehicles there. So, meaning we were able to offer flexible solution with a very minor investment.
I think this is one of the key competitive advantages of our company: working collaboratively between R&D and the manufacturing teams, and the sales and marketing, and supply chain management to find a solution for the consumer with the minimum investment.
So I think that's very clear example. Just to put into perspective some of the key numbers that we see, while this year, for example, we are expecting that the hybrid plus EV sales may represent about 20% all combined, versus 80% ICE, probably by the end of the decade, so probably by 2030, we can see this 20% going up to around 55%, and then the 80% ICE would go down to around 45%. But still, with a more than 30% increase in the total volume. So we see a significant change in the mix in a flexible way, which we believe is win-win.
Yeah, as for SDV service business model, you asked the question. To answer that question, as Mr. Song said, how do we view SDV? And to what extent do we define SDV? And to what extent do we internalize that? From that perspective, I will elaborate on it. As you know about SDV, we set our direction and are now working on it, and a crucial moment is the acquisition of 42dot. And to the company, group level, global software center mission has been assigned, and a lot of software technologies required for SDV and platform technologies have been developed.
But on the main body, how are we going to mount? And the main body, based on the paradigm, well, how will it change? That's the point we'll need to think about. Then, how much should we make change? Then, what's the methodology to do it? As I explained, I already touched upon it. SDV full stack is now being developed and internalized, and as I said today, software development methodology will be applied to vehicle development, which is very bold, so from OEM's perspective, that's very aggressive, and there could be a lot of clashes along the journey.
That is why SDV's Pace Car concept was thought by our company, so there we're going to make intensive investment. That's just in terms of technology and service and various business models. New attempts will be centered on it. With that, we're going to do migration quickly. That's our strategy. That is why AVP division was launched. With that, we thought software-centered division will be established, so that's a scaled up concept, you could interpret that, so advanced vehicle platform, by that we mean our legacy vehicle platform.
Going beyond that, as I said today, that is about new platform. On that, a lot of things will be internalized, and development structure will also be changed to make bold steps. Based on that conclusion, internally we made, we're going to go into that direction. Of course, depending on auto OEMs, there could be different strategies, or we can change software. There could be a lot of different methodologies. From our perspective, however, development structure, internalization level, fundamentally, we will need to take on challenges we thought.
So as I said before, it's not about simply changing auto manufacturing process, going beyond that. That is why to implement AVP in the back ends, we'll need to tap into data, and we will have to make a great shift in various areas. That's why we start with connectivity. And when such a process is established, we start with automobiles.
I think we could scale it up, so ultimately, on the group level, we are now heading into a unique territory. We do have auto and AVP and so on, and here, SDV-wise, when we implement our service from our customer's perspective on that platform, they could tap into our platform. So of course, there could be some challenges if we fail to internalize that, so in your question...
About your question, I can't give you a clear clarity. However, I can only talk about our direction and the fundamental change we're going to make. f you think about it, I think we could bring about our output going forward. Thank you. Because of time constraints, we will take more questions from only two people.
안녕하세요.[Foriegn language]
Hello, I'm from Meritz Securities, Kim Joon-sung. It's nice to see you up close, but I will ask you a question where you can give a very short answer. First is regarding Metaplant. So you put in a lot of CapEx, and I think compared to the Indonesia plant and Kia Mexico, they had the same capacity, but it only took about KRW 1 trillion or 2 trillion, whereas Metaplant, it has taken up to KRW 10 trillion. And you said the HMGICS, they prepared a lot for producing IONIQ 5. So my question is, this IONIQ 5 that's to be produced in October, what will be the selling price?
The IONIQ 5 that's being exported from Korea is about $50,000, and the all-wheel drive is $37,000, and the Santa Fe is about $36,000. So with a lot of investment, when IONIQ 5 is locally produced, will it be set to a mid-thirties or maybe thirty thousand range? Second question is for President Song, regarding smart car, the edge and cloud.
To do smart car, like you said, we have to collect a lot of data. We have to collect data, train it, and sophisticated. However, if you look at the directions set out so far, rather than building a self-chip, such as Tesla or Huawei's Kirin chip, they have their own chips used, or like Xiaomi or XPeng, they would use the chip of the NVIDIA.
You said that you're going to come up with the face car by the end of 2025 , and in those car, what kind of high-performance computer will be embedded? I'm curious on that, what your plan is, and what data center will be required to train those data? Will this data center be public or private? And because Mr. Song is from Naver, and in Korea, the most lead in AI training would be Naver Understand. And I think HMC needs to become number one. So what is your plan for data center?
Okay. So let me maybe tackle first the Meta Plant, the question. So from my point of view, the cost and the price are two different things, right? And then in our business, over the last few years, if you look at the consumer-facing transaction price and the price positioning of our products, we've been constantly trying to maximize the revenue management. So even if we were able to get the most competitive cost, I don't think the price would follow the cost.
In fact, you've seen like Tesla, it has been dropping consistently prices in the market. And then our strategy has been to try to maintain and even increase, if possible, our revenue management, our pricing. Therefore, I'm confident our Metaplant is going to be able to achieve the financial objectives for IONIQ 5. Concretely, we're working very actively well before the car is gonna be started in production, which will be on October this year.
Then, taking a lot of actions, including a potential volume growth, the positioning of the product, the utilization of the partnership with Hyundai Capital on the lease, and then the multiple cycle residual value and management, et cetera. Bottom line, I think we're gonna continue to try to increase price, not to drop price, if we are able to have the volume achieved.
So far, as you may have followed, we've got in Q2 more than 42% increase in the sales of our EV products. In fact, we've consolidated the position number two in the market after Tesla, achieving together with Genesis more than 11.2%, as I made the point during my presentation. The price is the price, the cost is the cost. We're working actively on both areas of the business. But again, to highlight the capacity that we will build in the plant is gonna allow us to compete not only on the retail marketing, but also potentially on the mobility markets, which is new markets, which are expected to be growing in the very near future.
So the HMGMA Metaplant, if I could also elaborate. Of course, the price, in addition to cost, is something that we need to take strategically in terms of approach. But this EV plant, HMGMA, you said that we invested more than KRW 10 trillion, because that includes the battery investment as well, KRW 10 trillion. But if you just look at the CBU plant alone, I think that would be a better an apple-to-apple comparison. But yes, we did make a lot of CapEx because automation level was pretty high.
Secondly, electrification. It's a dedicated plant, EV plant, but there's several models, and it's going to allow mixed production. So because flexibility is the key, it's pretty different to other plants that we have invested so far. However, labor input is going to be much lower, so OpEx will go down. So I don't think you should quickly judge with just CapEx alone, because the outcome and the effect of this plant is very different to previous ones. And you know, how much will IONIQ 5 will be because EV is not really doing well?
But I think in terms of plant operation, CapEx is the key. IONIQ, really, we can operate well, and the sales will also depend on how we manage. So the volume sales really depends on MSRP and whether it be thirty thousand or forty thousand, that will depend on those factors. So before completing our plant, that is constantly being discussed, and once it's done, we will give you an update.
As for the first question on AV controller, high-performance vehicle computers' characteristic is, first one is for infotainment, and the other is for AV. So separate network is included in the cloud, and vehicle network is also used for that. For the remainder, body control, we could also absorb it. However, the most expensive part is about AV, and in the market level two, plus two, three, and four, and our target is until 2026, we're going to have MPI. Every two years, we're going to double it. By 2030, the number will reach 800.
We're now developing in-house within 42dot and chip. In itself, we do have HMC's chip-making team inside. We're also thinking about developing it inside and partnering with other partners. With new launches of new chips, like 400 , 800 , there is more likelihood of increasing the number. Depending on it, it could go up to 400-800 . In fact, what we need is the more, the better. But the thing is about cost and price, it should be affordable to mount it within the vehicles.
Our direction is to minimize the number of sensors. Every fleet and data sensor are going to be shared so that no matter where it is, we can train the data. That's our direction. Controller cost is very important. Even now, we're now working on the engineering of it, design engineering, and even if we do have the next generation, we do work on the next generation, so it's evolving right now. Based on the cost target we set, we do have it.
So we're now finding ways to reduce the cost. I can't fully communicate the specific number, but we're now working on to reduce the number. By collecting data, how could I train the data? There could be two things. The first one is for RDM, and the other one is for AV. As for the latter, we talked about end-to-end solution, which we need to switch to going forward in terms of training methodology. And better than image with video, we're now working on it.
So a lot of training data will arise. To train a specific model, it takes about like five days. In the case of RDM, it might take up to one month. So even if we do have lots numbers, our target is by 2030, it'll be up to about 10K. Because the demand is too large, A100, H100, it's very difficult to buy it. So public GPU cloud is now used a lot. Hybrid is used a lot, so half will be private, and we're now tapping into public AWS, Azure.
A lot of cloud companies are now working with us. So going forward, if possible, in terms of training, we do need a platform developers are familiar with, so we could go for NVIDIA or other partners as well. So I think there could be another partner alternatives, which we're now looking on. So we're going to minimize our cost. At the same time, we're going to increase the number of the models we mount. So we are going to pursue optimization even if we have the same number. By providing training, we're going to pursue optimization so that within the auto life cycle, we're going to continue improving, which is the most important.
Thank you. So now we'll take the last question.
There are a lot of foreign investors here. Sir?
Hi. It's Daniel Lee from WCM Investment Management. Thanks a lot for having us all here. My question is: so Hyundai Motors has generated pretty record-level operating profit margins in recent times, and I guess I'm curious to understand, especially with the midterm goals being to have, like, a 10% operating profit margin, how much of that is kind of really sustainable at, like, these current levels? Like, how much of this high operating profit margin is really a structural change, versus something that's cyclical, that could be more of a short-term phenomenon? Thank you.
Yeah, I guess. Yes, how we demonstrate our future in terms of with the profit generation, the pipeline? Yes, as we have already the proven of the capability to show, okay, 8%-9% of our margin, I think this is a streamlined we are already on. The question is upstream and the downstream, what's new and what's incremental, and the downside, how do we reduce the risk? I think based on the presentation that I have for today on our strategies and all those things, I'm expecting this is also enhance the conviction, the conviction that we have a high potential and the capability that we can reach out that goal.
In midterm, between 2027 and 2030, we are aiming to target around the, you know, 9% and 10% on margin, which is mostly based on our, you know, continued growth in our SUVs and the luxury vehicle, where we are also adding very profitable, the hybrid and also the EREV that we are expecting as well. While during this time period, we are also focusing on to reduce the cost for the batteries, right? For the EVs, and that give us another competitive edge to sustain our profitability for the next level. Those are the streamlines that we are thinking.
On top of this, the new business that we are working on now, that should be the next, you know, next round of a profit generation for the future. Those are, you know, our projection for the profit contributions. Yeah.
About hydrogen, is there anyone who would like to ask about hydrogen or energy? Ken. Any other question about hydrogen or energy?
... And about, so I pick a topic that has been covered through many of the questions about HMGMA, our plant in Georgia. As I mentioned before, this is really our launching platform for many areas, and this is where our hydrogen logistics business is established as well. I make an emphasis on the fact that it's not a project or a POC. This is really our business launching.
The fact is that we are at an inflection point in hydrogen and energy, where we go beyond POCs or projects to now establishing business that is sustainable, not just ecologically, but financially. And this is really where we are showing our conviction to go into a business direction with hydrogen. I'll be a little more specific.
The project here, the business we launch in Georgia is delivering logistics to the plant with zero emissions at equal cost as diesel. Now, how that is done is we are establishing, of course, the use of the vehicles with a much optimized cost of the vehicles. At the same time, the cost of hydrogen is a topic to bring as well.
What we have seen clearly is that in the majority of HRS, in fact, in Korea, we know that the cost of hydrogen is, at the recharge station, about 50% transport. So as we progress in bringing the cost of hydrogen down, if we don't also tackle the fact that transport cost is a major part of it, it will always be a significant part of the cost.
This we've addressed with a process that we adopt of producing where we consume, so we produce hydrogen much closer to the plant, and therefore, we have no transport cost. This is allowing us to deliver at essentially same cost as diesel, the logistics, and also the hydrogen at the same per mile or per kilometer basis cost.
We are pioneering this and developing a real hydrogen business because this is the direction we need to take, not just proving, and this is without subsidies, so yes, we want to have subsidies everywhere we can do it, but at longer term, we establish a sustainable business, so I take the point because a lot has been talked about HMGMA.
This is really an outstanding initiative that we've taken in HMGMA for many reasons, not just for EV and HEV production, but now for also demonstrating with our own operation, a real business solution for hydrogen. Thank you.
Let me add more about hydrogen. When it's going to take hold tangibly, there are a lot of concerns on. However, I think that's about chicken and egg issue. On the group level, the direction we're now heading into is that unlike battery, we could go for hydrogen business, and it can go beyond mineral. That's independent resource we have. Depending on region, we could stand alone. That's the direction we will have to head into, and I said this is chicken and egg game. So in terms of hydrogen game, we are like chicken.
So we're going to pioneering the uptake and to lead the market. We also talked about hydrogen market, which require investment and a lot of things. 30 years ago, BEV, when it was launched, yes, the same issue was mentioned: cost, where to charge, and it does not make sense, people said. From 1998, we kicked off the business, and in terms of hydrogen cost infra, there are concerns of course. However, that's the something we have to head into, and that's something that Korea can do well in terms of technology. So as you said in the prepared remarks today, we're going to continue to make investment, bring about tangible results.
All right, so I would like to thank you all for coming here today and for your time. We prepared our presentation as much as possible, and it really took a lot of time 'cause there were a lot of presentation. Whatever the case, thank you for your expectations as well as your feedback on us, and we will keep heed to your invest- to your comments. Thank you.