Tucson hybrid to move from Ulsan to Alabama

New engines, hybrid components and EREV powertrain to be built locally

Santa Fe EREV set for US launch in first half of next year

Move aims to cut tariff exposure and accelerate localization

Hyundai Motor President and CEO Jose Munoz speaks at the HMG Tech Talent Forum. [Hyundai Motor Group]
Hyundai Motor President and CEO Jose Munoz speaks at the HMG Tech Talent Forum. [Hyundai Motor Group]

Hyundai Motor will invest approximately $500 million in its Alabama production facility, shifting Tucson hybrid manufacturing from Korea to the United States while also producing the Santa Fe extended-range electric vehicle at the same plant. The move aims to reduce tariff exposure and meet rapidly growing demand for hybrids in the American market.

Hyundai Motor President and CEO Jose Munoz announced the investment Tuesday (local time) at the 2026 Automotive News Congress in Detroit.

Through the investment, Hyundai Motor will produce new engines, hybrid components and EREV powertrains at its Alabama factory and expand the range of finished vehicles assembled there. "We plan to produce the Tucson hybrid at the Alabama plant, and after that we plan to bring the Santa Fe as well," Munoz said.

The most significant change is the production location of the Tucson hybrid. All Tucson hybrids currently sold in the United States are manufactured at Hyundai Motor's Ulsan factory and exported. The Montgomery, Alabama plant currently produces the Tucson's internal combustion engine models and will now expand its lineup to include the hybrid variant.

The Tucson is one of Hyundai Motor's top-selling models in the United States. Sales from January through August this year reached 158,523 units, up 7.3 percent from the same period last year. Producing the hybrid version of its flagship model in the US would boost local supply capacity while reducing the tariff burden on Korea-made vehicles.

The other pillar of the Alabama investment is the EREV. Hyundai Motor plans to establish a local development and production base for EREV drivetrains intended for North American vehicles, with the Santa Fe EREV also slated for production in Alabama.

An EREV uses an electric motor to drive the vehicle while an internal combustion engine primarily acts as a generator to charge the battery. The technology allows for long-distance driving with a smaller battery than a pure electric vehicle, reducing the need for frequent charging.

The Santa Fe EREV is being developed with a target US launch in the first half of next year. Hyundai Motor has set a total driving range target of more than 600 miles (about 966 kilometers).

Hyundai Motor's decision to extend its US production footprint to hybrids and EREVs reflects a shift in local automotive demand. Hybrid sales have been expanding rapidly even as growth in pure electric vehicle sales has slowed.

Hyundai Motor's US hybrid sales in August rose 33 percent from a year earlier. Hybrids accounted for 29 percent of the company's total US sales that month, a record high.

The combined presence of Hyundai Motor and Kia in the US market has also been growing. The two automakers ranked third in monthly market share in the US new-car market for two consecutive months in July and August, surpassing Ford both times. Their August share of 12.9 percent set a new all-time high.

The Alabama investment aligns with Hyundai Motor Group's previously announced plan to invest $26 billion in the United States through 2028. Hyundai Motor aims to add 500,000 units of annual production capacity in North America by 2030 and raise the local parts procurement ratio to around 80 percent.

On the company's US localization strategy, Munoz said the approach would not change with shifts in administration. "Investment requires a much longer-term strategy," he said. "We will further strengthen our US engineering capabilities to focus on developing and improving products for the local market, alongside efforts to expand our supplier network in the country."

Hyundai Motor is also broadening its vehicle lineup to suit the US market, developing body-on-frame pickup trucks and SUVs for launch before 2030. "We have made remarkable progress in terms of quality, and we are now ready for the next challenge," Munoz said. "We are ready to compete."


kwater@heraldcorp.com