Kia Motors Corporation announced details of Plan S, its mid- to long-term strategy aimed at progressively establishing a leadership position in the future automotive industry, encompassing electrification and mobility services, as well as connectivity and autonomy.
The Plan S strategy outlines Kia’s pre-emptive and enterprising ‘shift’ from a business system focused on internal combustion engine vehicles toward one centered on electric vehicles and customized mobility solutions. The company’s ongoing brand innovation and profitability enhancement will support the two-track Plan S strategy targeting the shift toward electric and autonomous vehicles as well as mobility services.
Alongside Kia’s 2025 financial and investment strategy, details of Plan S were announced to shareholders, analysts and credit-rating agencies at the company’s CEO Investor Day in Seoul today.
By the end of 2025, Kia plans to offer a full line-up of 11 battery electric vehicles. With these models Kia is looking to achieve a 6.6 per cent share of the global EV market (excluding China), while also attaining a 25 per cent share of its sales from its eco-friendly cars. With the global EV market expected to gain strength by 2026, Kia is aiming for 500,000 annual EV sales and global sales of one million eco-friendly vehicles (excluding China).
Alongside these objectives, Kia will offer EV-based mobility services as part of its new business model, helping solve global urban problems such as environmental pollution. In the Purpose Built Vehicle (PBV) market, anticipated to grow on the back of expanding car-sharing and e-commerce businesses, the company will secure leading-edge competitiveness.
Plan S will see Kia Motors invest a total of US$25 billion by the end of 2025 to establish leadership in vehicle electrification and diversify its business. By the end of this period, Kia Motors is targeting a six per cent operating profit margin and 10.6 per cent return on equity (ROE) ratio to secure the necessary capital and maximize shareholder value.
“As the auto industry undergoes turbulent changes, today is also an opportune time for Kia Motors to radically transform itself into a global enterprise dedicated to spearheading customer value-led innovations,” said Kia Motors president and CEO Han-woo Park. “Kia Motors will actively innovate to take on the challenges ahead, identifying and capitalizing on new opportunities to propel the company forward.”
“Plan S is a bold and enterprising roadmap for Kia’s future business transition, buttressed by the two pillars of electric vehicles and mobility solutions,” he continued. “Our approach is to put customers first, and Kia will reinvigorate its brand innovation by developing products and services that offer new experiences for customers.”
As the two strategic objectives of Plan S, Kia will concentrate on (1) leading the popularization of electric vehicles, and (2) expanding mobility services for electric and autonomous vehicles, as well as entering the PBV business.
The company will pursue innovations across the board, encompassing brand identity, corporate identity, design identity and user experience, among other fields. Kia aims to enable customers to directly feel, experience, and understand the company’s evolution as an enterprise championing EVs and mobility solutions.
Kia’s new brand system, which is slated to be revealed in the second half of this year, is currently being formulated under clear objectives. This includes becoming a pioneer in the age of EVs, a brand beloved by the millennial generation (those with a good grasp of information technology born between the early 1980s and early 2000s, a period witnessing the transition from the analog to the digital era) and Z generation (those born after the mid-1990s and grown up largely in a digital environment with a natural inclination for using digital tools, hence their nickname, ‘digital natives’), and a symbol of challenge and innovation.
At the same time, the company plans to maximize shareholder value and win more trust from the market by steadily strengthening its competitiveness through innovation of existing businesses, as well as by increasing profitability of future businesses.
Preemptive transition to EV business
Kia will focus on securing its leadership in the global EV market by adopting a strategy of product differentiation, such as launching a dedicated EV model, as well as by establishing a company-wide innovation system.
Kia plans to lay the ground for its great leap forward by transitioning to an EV-based business system ahead of competitors, leveraging its production capabilities in manufacturing internal combustion engine vehicles.
By prioritizing future customer value, the company also plans to develop and release innovative EV models, offering a differentiated product appeal, such as an EV-specialized design, user experience and quality. Starting with the launch of its maiden dedicated EV model in 2021, Kia will establish a full EV line-up of 11 models by 2025, adding new EV models to its whole line-up along the way, including passenger vehicles, SUVs and MPVs from 2022.
The dedicated EV model to be launched 2021 will be built on a unique platform specifically engineered to accommodate the car’s EV powertrain and technologies. It will offer a crossover design which blurs the boundaries between passenger and sport utility vehicles, a future-oriented user experience, a single-charge driving range of over 500 kilometers, and sub-20-minute high-speed charging time.
Across its EV line-up, Kia plans to operate two different types of EVs with different charging capabilities (400V/800V) – high-performance dedicated models and derivative models with reasonable pricing – to meet the diverse needs of customers.
Growth in global EV sales will be pursued in accordance with a customized, market-oriented strategy, which considers regional differences in environmental regulation, subsidies, infrastructure and more.