Hyundai Says Hybrid Margins Now Match or Surpass ICE Models, Targets Stronger EV Returns with Scale

Hybrid vehicles are already delivering profit margins equal to or even better than conventional internal combustion engine (ICE) models in many markets and will play a central role in Hyundai Motor India’s powertrain strategy through the rest of the decade, according to José Muñoz, President and CEO of Hyundai Motor Company.

“At the moment, ICE models remain the most profitable, and hybrids are also highly profitable,” Muñoz said at the company’s Investor Day 2025. “In markets where we already compete with hybrids, their profitability is equal to or even higher (than conventional powertrains). Our hybrid technologies are very strong, and as the segment grows, we expect to see an interesting evolution in profitability.”

Muñoz expects the profitability of hybrid vehicles to rise further as technology improves and production volumes expand. He added that Hyundai’s R&D teams are also working to reduce costs and improve performance of hybrid powertrains, reinforcing their profitability advantage and strengthening the company’s position as electrification accelerates in markets such as India.

In India, Hyundai plans to launch eight hybrid models by 2030, part of a broader plan to introduce 26 new models by the end of the decade. Previously focused on ICE, CNG, and battery electric vehicles (BEVs), the automaker is now placing a significant bet on hybrids, which it expects to account for around 16% of its total product mix.

Hyundai’s aggressive push for hybrid powertrain comes as the government recently came out with a revised draft for the third iteration of Corporate Average Fuel Economy (CAFE) norms that proposes to make average CO2 emissions more stringent. The proposal seeks to give a big push to hybrids as well, apart from EVs.

BEV Profitability 

While hybrids are fast emerging as a major profit driver, battery electric vehicles (BEVs) still deliver lower margins across the industry, and in some cases remain loss-making for competitors. Hyundai, however, is confident this will change as production volumes grow and cost efficiencies from shared platforms, technologies, and sourcing begin to take effect.

“Today, everybody knows battery EVs are less profitable, and in some cases are loss-making for some competitors,” Muñoz said. “We’ve been working very hard to ensure that our fundamentals are such that we are profitable with battery EVs.”

Hyundai is consolidating its BEV product architecture around common platforms and shared technologies for sourcing, sales, and manufacturing, which will significantly lower costs as volumes increase. The company projects that electrified vehicles including BEVs, hybrids, and ERVs, will make up about 55% of its sales mix in India by 2030.

“While today battery EV profitability is lower, we are confident that as we increase production, volumes… as we have done with hybrid, that step by step, we'll be able to deliver similar levels of profitability,” Muñoz said.

Hyundai currently offers the Creta EV and IONIQ 5 in India’s electric segment and plans to launch its first fully locally designed, engineered, and manufactured electric SUV in 2027. The company aims to have five EVs in its Indian portfolio by 2030

Localisation and Export Scale 

A critical part of Hyundai’s plan to improve powertrain economics lies in deep localisation of manufacturing and supply chains in India. Muñoz argued that the company is already among the most localised automakers in the country–not just assembling vehicles domestically, but also exporting them in significant volumes.

“I would argue we are the most localised company in India, because to be localised not only means that you sell what you produce, but you also export,” Muñoz said. “We get in India more economies of scale than companies who do not export. And the countries receiving products from India all want more production because it’s very good quality and very competitive.”

This deep localisation, combined with export-driven scale, will underpin Hyundai’s ability to sustain double-digit profit margins and strong shareholder returns as it transitions its portfolio towards electrification.

“I think this is going to give us strong fundamentals to sustain the double-digit profits and the high returns that we have announced to our shareholders,” Muñoz said.