Hyundai Motor Company (A005380) Earnings Call Transcript & Summary

Welcome. Please welcome Jose Munoz, President and CEO of Hyundai Motor Company to the Stage. [Foreign Language]

[Foreign Language] Good afternoon, and welcome to our 2026 CEO Investor Day. A special welcome to those watching online. We are very pleased to be hosting this year's CEO Investor Day here in our home market. Our commitment to this country has never been stronger, just like our economic impact here. Our founder, Chung Ju-yung, literally paved the way to today's career. We are very pleased to announce that we have a tentative agreement with our union. Thank you to our employees for their continued dedication throughout this process. Thank you for being here. We appreciate your interest we welcome the hard questions. Last year, we told you what we were going to do. Today, we want to give you a status report and show you the exciting road ahead. So ladies and gentlemen, we are transitioning to a physical AI and technology company. We will be building, deploying even financing robotics at scale. We are also advancing autonomous driving in-house and with partners. At the same time, we will never lose sight of delivering exceptional vehicles, beautifully designed cars that are highly quality, safe and with features that customers appreciate. Our car business helps fund the future, and we remain laser-focused on delivering our plan. I say all time that it is a great time to be at Hyundai, and it is great to be in this industry. I've also said, it is one of the most challenging times I've ever experienced. We draw inspiration from our founder to create opportunities from challenges. In the first half, we sold 2 million vehicles and delivered KRW 95.2 trillion in revenue, up nearly 3% and a record. Operating margin was 5.6%, and it improved by 0.3 points from the first quarter into the second. Hybrid sales reached 363,000 units, up 18%. And in the United States, we have now grown market share for 5 straight quarters, thanks to our team, dealers and partners in the U.S. Our market capitalization has averaged KRW 105 trillion this year, 2.3x last year's average. That is the market telling us it understands how we are transforming into a technology and physical AI company that also produces cars. So let's look at where our revenue is derived. North America is about 1/3 of our volume. Korea, India and Europe are each in the mid-teens. The rest seats across Central and South America, the Middle East and Africa Asia Pacific and China. No single market carries this company in a year like this one, that matters a lot. In the United States, we set records in the first half with 509,000 wholesale units and 490,000 retail sales. Our hybrid mix rose 3 points. SUVs are now 62% of what we sell. Mix is where margin comes from and ours is moving the right way. Third, in the worldwide volume, second, in operating income for second year running. Profitability at this level is what enables us to invest in future products, future mobility, capacity expansion and physical AI. We are very proud of the evolution of our product portfolio. This is recognition that you cannot buy. 13 top safety peaks this year across 8 Hyundai models and 5 Genesis models. Consumer Reports has a first for safety among premium brands and second, among mainstream. The PALISADE is 2026 North American Utility Vehicle of the Year. The ONIQ 6 N is 2026 world performance car. And in India, the Venue took Car of the Year. Thanks to our engineering teams in Namyang for developing cars that not only meet or exceed our high expectations for quality and safety, but that have features that delight our customers. We know our competition is in standard steel, especially some of the newer OEMs. You will see how we are developing new cars that are ready to compete today and tomorrow. A word on our engagement at the World Cup. It is a significant investment, but also significant return for us. This simply shows that we made the most out of our investment and had very high engagement, including more than 250,000 test drives in 44 countries, which we know drives purchase consideration. We are currently maintaining guidance for 2026 operating margin between 6.3% and 7.3%. And we are also very realistic about impact of external factors in the short term. I am happy to announce for the first time that we see a path to an operating margin above 9% by 2030. Our CFO will talk more about how we are increasing our target by maximizing synergies and better utilizing our supply chain. Our 2030 goals are intact. 5.55 million units of global sales by 2030 from 4.1 million. Electrified vehicles at 60% of the mix from 23% and global market share of 6% from 4.7%. How do we get to 6.3% to 7.3% for the year from 5.6% today? The answer is our second half product offensive, which you will see in a few minutes. Those of you who know me, no, I think we can do always more, but this is our guidance today. Now let's step back and look at the opportunities and some of the technology bets that we have been making. Future mobility opportunities double our profit pool potential by 2035. The car business is still the largest piece. What changes is everything growing around it. Software and connectivity, after sales, financing, on-demand mobility, robotics, very few companies sit across all of that. This is the power of the group. Boston Dynamics and RoboticsLAB, Motional and 42dot, Autoever, Capital, Mobis, Glovis. We do not have to buy our way into the next decade. We are already living in it. The strategy is simple to say and had to do, maximize the profit of the car business today, throughout product efficiency and localization, then fund the future through the power of the group and our partnerships. SUVs, hybrids performance and luxury pay for software, autonomy, physical AI and robotics. Our business mix shifts across the decade. Now let me show you the proof. Scale starts with platforms. Four of them carry almost everything we build from the i10 to the IONIQ 9, and we share them with the group. That gives us the ability to be local without being expensive. The Exter for India, HB20 for Central and South America, Bayon for Europe. Santa Cruz for North America, Grandeur for Korea, IONIQ V for China, the same platforms customized for the taste in each market, finding synergies where they make sense and making sure that our brand differentiation is clear to customers. We have the same discipline on powertrains with the most complete portfolio in this industry. Gasoline engines from Kappa to Lambda, hybrids in both front and rear wheel drive layouts, battery EVs from LFP through high-performance nickel chemistry, fuel cells. And now extended ranges for all ERVs, which have so much potential and which I will come back to. This is how we maintain flexibility. When demand shifts, and it has a great deal, IRA conflict in the Middle East, we already have the product. I always tell the team, it is simple, give customers what they want. The lifeblood of this industry is product. I am happy to announce for the first time that between now and 2030, we will have more than 100 product launches around the world. That is 100 launches or new or refreshed vehicles for Hyundai and Genesis over the next 4 years. 58 in North America and 22 of those are Genesis. I'm excited to also announce for the first time that we will have 49 launches here in our home market of Korea. We will have 41 launches in Europe. We've spoken about our ambitious plans in India and China, which you will see here as well. There are more than 18 new products and segments in which we don't compete today. This is very significant. And our first extended range EVs is the production in early 2027. This is the most ambitious product offensive in our history. Before we talk about 2030, look at the next 8 months for Hyundai. The all new Elantra, which is the Avante in Korea, the brand new IONIQ 3, the all new Tucson and Tucson hybrid, the first ever Santa Fe EREV, a brand-new A SUV EV for India and all new global B-SUV and an all-new B-SUV for Europe. 7 Hyundai launches after a slower first half. The Tucson is the seventh best-selling vehicle in the world with more than 10 million in global sales. The all new Tucson and Tucson hybrid arrive in the fourth quarter. And I want you to look carefully at what the hybrid does against the gasoline version, 245 horsepower, 27% more power and 43% more torque, faster to 100 kilometers an hour and 43% best fuel economy at the same time. The all new Tucson hybrid offers the best combination of performance and efficiency. Extended range CVs arrive in early 2027, and we build them on multiple continents. The Santa Fe EREV provides more than 600 miles of range, about 1.6x what the gasoline Santa Fe delivers using a new high-performance battery and a 2 motor system that drives and accelerates like an EV. We already have prototypes of the new Santa Fe EREV on the line at our plant in Alabama. For a customer who wants the EV experience without changing how they refuel we now have an answer, and it's made in America. This is a good way to dimension future product opportunities and portfolio wide space. There are 26 million units a year in segments where we have little or no coverage. That is 29% of the total industry, pickups like commercial vehicles and large SUVs are the biggest gaps in the markets that pay the best, 100 new launches, 18 new products and segments. You have seen where we are growing with Boulder with IONIQ Earth and with Crater. Concepts are easy. What makes this different is that the body on frame architecture behind them is funded and in development. More than half of our growth from KRW 4.1 million to KRW 5.55 million come from products we do not sell today. Body-on-frame vehicles, a large ban, SUVs and MPVs. We are simply taking what we already built to places where we currently do not sell. The Exter and the Verna both made in India go into new markets on the back of an ecosystem we have spent 30 years building. And the rest is organic share growth offset the portfolio rationalization that we're doing deliberately. Look at how we shape of this company, how we've changed. In 2020, more of our sales came from Korea and North America. By 2030, you can see a much more diversified regional sales mix. Diversification of sales follows growth and opportunity. In this environment, it is also hedged. With new vehicles and new launches, we need more production. So we are adding 1.27 million units of capacity by 2030. We are adding 500,000 capacity in North America, 320,000 in India. 250,000 across our CKD sites, including Saudi Arabia, Vietnam and Algeria. 200,000 in Korea, including in our all-new EV plant in Ulsan. As I have said many times, we built what we sell. That was true before tariffs, and it will be true long after. Localization is the name of the game. North America is where our hybrid story became a scale story. We have sold more than 1 million hybrids there. It started in 2011 with the Sonata Hybrid at 1% of our mix, this year, it is 25% with the PALISADE hybrid. And we'll continue with the all-new Tucson hybrid and the first hybrid Genesis, the GV90. By 2030, we will offer more than 10 hybrid models and hybrids will be half of what we sell in the region, built in Alabama and at the Metaplant in Georgia. As I mentioned, our first extended range EV will be introduced in North America from the first half of 2027. Our supply chain is, of course, an essential part of our production ecosystem and another important aspect of localization. We will increase part localization on the vehicles we built in the United States from 60% today to 80% by 2030. We have added more than 275 local suppliers since 2024. One supplier at a time and one part at a time. Our mission has always been to bring value to our customers and offer affordable options. The Elantra SE brings people into our brand at under $23,000, 64% of those bus when they come back, come back for a Tucson or something above it. More than half of our sales mix is now TRIMs carrying at 20% premium or bill limited calligraphy and XRT Pro, and we do it a spending 13% less on incentive and the industry average. By closing 77% of the transaction price gap to our competitors. We are not buying the volume. Customers are choosing to pay more because the product is worth it. Let's talk about Europe. One of the most competitive regions on the planet. We now cover 85% of that market with an electrified portfolio, and we are adding 5 new electrified models across SUVs and light commercial vehicles. We cover 100% of the B and C segments, which together are more than 60% of everything sold in Europe. This is full coverage where the volume sits. Our EV volume in Europe was 116,000 units last year, and it goes past 420,000. Every EV credit we earn protects the ICE and hybrid business alongside it. The EV line does not stand alone in the market. We have 580,000 units of European capacity with room to grow, and more than half of it will be battery electric, including the IONIQ 3. Local content is 85% in Czechia and 70% in Turkey. And our next generation of EVs takes 30% out of battery cost per kilowatt hour. Our sales and service footprint is more than 2,250 dealer outlets and service centers and 550 fleet business centers, quality, reliability and service at the most important topics for fleet customers, so we service them what they needed. The IONIQ 3 goes on sale this month, built in Turkey, nearly 500 kilometers of range at 61-kilowatt hour battery and 29 minutes to charge from 10% to 80%. It is also the first vehicle in Europe with PLEOS Connect and our Gleo voice assistant. Now to India, one of our most important markets and where we also trade publicly. SUVs are 70% of what we sell there today on that way on the way to the 80% by 2030. The Creta has been the best-selling midsized SUV in that market for 10 consecutive years. A brand new compact SUV EV is coming designed and localized for India. And electrified vehicles reached half of our mix there by 2030 against our 30% for the market as a whole. The opportunities in rural India are massive, rural rises to 30% of our sales by 2030. That is often a family's first car ever and they are choosing us. We reached 85% of this coverage by 2030 with more than 1,600 service touch points today and 79% customer retention. Also, this is important. And the capital launches there this year. So those customers are better ways to finance. India is now our second largest production base anywhere outside Korea. Our new Pune plant opens this year, taking us toward 1.1 million units of domestic capacity. Localized content goes from 84% to date to more than 90% by 2030 with more than 1,400 local suppliers, 3/4 of them in the base, and more than 1,300 local engineers. More than 60% of our vendors are clustered around Gen9. We've been in India for 30 years, learning what customers want and how to deliver in the most efficient way possible. India is also a factory for the world. Our cost position there is more than 15% better than our global baseline. 4 million vehicles have been exported to more than 70 destinations. Exports rise to as much as 30% of what we've been there by 2030, with half of it going to the Middle East and Africa and 40% to Central and South America. The i10, Venue and Exter are built there for the world and no one else. Korea is the heart of our manufacturing operation. Tucson is the largest automotive manufacturing operation in the world, 1.8 million units of capacity more than 60% of it exported. 27,000 manufacturing employees and more than 4,700 local suppliers. 22 models coming down, mix powertrain lines. We are so grateful for the men and women at our facilities that build our vehicles with such precision and care. Later in the year, we will open the Ulsan EV plant and the first car down the line is the Genesis GV90. It is a software-defined factory with 108 advanced manufacturing tools. AI-enabled quality control and a manufacturing AI agent working alongside our people. And from 2027, we modernized Ulsan plants, 1 and 4. We continue to invest in our modern plants. Hyundai Motor Group is investing KRW 125 trillion in Korea, the largest domestic investment in our history. KRW 50.5 trillion goes into future business across AI, software-defined vehicles, electrification, robotics and hydrogen, including $9 trillion for a dedicated hub. Another KRW 38.5 trillion into research and development and KRW 36.2 trillion into our production facilities and the global business center. Korea is our home spiritually and physically. Sometimes people ask me if we are a Korean company that's global or a global company that's Korean. The answer is yes. Our commitment to this country to creating high-paying jobs and investments that benefit the economy and giving back is literally part of our DNA. No matter how much we grow internationally and the success is Korea's success. And Korea's success is Hyundai's success. Now China, where we are working to turn around the business and using all the levers of the group. After volume profit declines, we are implementing a new plan and tripling down on the world's largest and most competitive market. Profit is stabilizing now, and we are on the way back to more than 500,000 units by 2030. The plan has 3 parts: relaunch with a IONIQ brand, modernized the network to 484 dealers by 2030, moving into Tier 1 and Tier 2 cities with lighter reformats and built with the best Chinese technology partners in China for China. IONIQ, we launched there earlier this year, more than 600 kilometers of range, a 27-inch panoramic display and AI assistant and driver assistance tuned for Chinese roads, which are unlike anywhere else developed in China, built in China. AB SUV and AC SUV follow in 2027 both offered as battery electric and extended range. Then a second phase with premium new energy vehicles on a full stack software platform. We are tripling down. We have the scale, the engineering, the network and the power of the group to compete with anyone, anywhere, including in China. The Middle East and Africa is our next frontier. The middle and upper class there passes 700 million people by 2035, and industry volume goes past 5 million units. We are already the #2 brand with 8.4% market share across more than 50 countries with 8 assembly plants and double-digit margins. Our new Saudi Arabia plant opens in December, and our facility in Algeria in 2027. Let me talk about performance because it is a profitable business, not just emotional one. Hyundai N reaches about 30% of the performance market today. By 2030, we take that past 60%. We will have more than 7 N variants across more than 40 markets, targeting 100,000 sales a year. And we are adding something between N and N Line a new volume, high-performance variant carrying over powertrain and parts from. So a customer who wants that feeling every day on the way to work, can have it without buying a track car, N sold 20,000 units last year. N Line sold 161,000. This sits between them, and it is where the volume is. Five N models on sale today and 12 N Line products, 2 world performance car winners in a row, the IONIQ 5 N and the IONIQ 6 N and the Elantra N carbon neutral racing line. We earned that credibility before we put it in shoes, and it is now spreading across the whole and the lineup. Last week, we unveiled the brand-new Genesis GV90 for the first time. I said, Korea has scape up, K-beauty, K-drama and now with our new flagship luxury SUV, we have K-luxury. Genesis reached 1 million cumulative sales in 7 years, 8 months. No luxury automotive brand has ever done it faster. And we are now in more than 24 markets. 10 years ago, Genesis was our promise. Since then, we've operated like a startup that has the sources of a well-funded parent company. This year alone, we have introduced the ex Scorpio concept. The GV90 win back, our first dedicated dealerships in Europe and the U.K., the MAGMA GT and GT3 concepts. Our debut in the world and during championship and our first Lema, racing, which is not just about marketing, win on Sunday, sell a Monday. You cannot hide anything at Lima. And what we're learning as part of the warrant during circuit ends up in the cars our customers drive. Ladies and gentlemen, please welcome for the first time ever the Genesis GV80 hybrid. We brought a new GV80 hybrid to this event, especially for you. The all-new GV80 hybrid launches next month. The first hybrid Genesis has ever built 352 horsepower, roughly 25% better on both efficiency and power with a liquid cooled hybrid battery. It drives like an EV and it never asked the customer to plan their day around a charger. 10 years of Genesis and it still looks like nothing else in the segment. Our Genesis Extended Range EV follows in early 2027, with more than 640 miles of range. And this is the Magma GT concept, the first pure sports car in the history is Genesis unveiled at Lima, a brand that wants to be taken seriously in luxury has to prove something on a race track first. Luxury is where the profit is, and it is growing. The global luxury market goes past 3 million units by 2031 at 10% compound growth, led by the United States, Europe and China. And within luxury vehicles, 25% of buyers express excitement towards electrified Super SUVs, more than any segment by a wide margin. We see a lot of excitement for super SUVs, and we certainly show a lot of enthusiasm for our brand new GV90 last week in San Francisco. Have a look. [Presentation]

Genesis GV90, our new luxury flagship. The Neolun Arch Gate coach doors with hidden B pillars and a reductive design. Swiveling seats adaptive UX and OLED cinematics display and the world's first roof airbag. Nobody has done that before. The GV90 is the ultimate expression of the brand and our [indiscernible] philosophy. The new GV90 rounds out our existing lineup, 7 models or 15 counting derivatives across SUVs, hybrids and performance. Five top safety plus awards. First, for safety among premium brands. That is not a coincidence. It is intentional. We build this brand where our customers already are. The Genesis Invitational and the Scottish shopping both extended to 2030. And we've been the places to receive these cars. More than 270 retail locations globally by 2030, 50% more than today. Suji and the Genesis launch in Seoul, Almer in the Netherlands. Genesis designs, California, and finally Sydney. This year alone, Genesis launched in Italy, France, the Netherlands, Tunisia and Morocco with Spain in the fourth quarter. Austria, Denmark, Poland and Portugal follow in 2027, then India and Asia Pacific, more than 40 markets and 350,000 sales by 2030. Now let's shift from luxury to future mobility. Autonomous driving has the potential to increase safety and convenience exponentially, and it also has incredible profit potential. Our AV Foundry business is enabling a scalable robotaxi development starting with an AV ready IONIQ 5. Our approach to autonomy includes in-house development with Motional and 42dot as well as partnerships. Motional is partnering with Uber to make driverless commercial rights available later this year on the Uber app. I also want to give an update on our Waymo partnership. We have completed 9 months of public road testing so far, deliveries of AV ready IONIQ 5 to Waymo will begin later this year, fully built in the United States with a domestic supply chain. I am excited to announce that we are bringing this Waymo partnership to international markets. We are also entering the electric 3-wheeler segment with TVS Motor Company, designed by Hyundai codevelop and produced by TVS, concept to prototype in under 24 months with very little capital from us. It opens a mass volume segment across Asia and Africa that we could not have reached alone. Our partnership with Amazon continues to expand as well. Amazon Autos now covers 80% of the U.S. market through dealer enrollment and 78% of those buyers are new to Hyundai. I'm happy to announce that we are expanding Amazon Autos to international markets as early as 2027. Alexa extends across our entire lineup with Genesis to follow. Together with AWS, we are scaling our AI work across software, autonomy and robotics. And finally, we are exploring collaboration across optimized logistics, alternative energy and new customer experiences. As our executive chair said last week, we are becoming a physical AI company. We are moving faster than our competitors to produce and deploy robotics at scale. Ground zero for commonalization of robotics is our newly opened Boston Dynamics Robot Metaplant Application Center at HMGMA. It exits to collect data and validate robots against real factory conditions before they ever touch a production line. By the end of this year, we expand that site more than tenfold. Deployment at the Metaplant in Georgia follows at scale in 2028 and Global Robotics deployment from 2030. Let me be clear about our utilization of robots. Robots are in service of humans. They do the work that is difficult and repetitive. Ultimately, this will improve safety, quality and efficiency in our operations. Robots are not replacing humans. We are creating new categories of jobs like robot maintenance, all while maximizing human potential. And here is what makes this different from a research project. We are investing in robotics manufacturing facility in the United States, starting production in 2028 with 30,000 units of annual capacity. It will be the world's first large-scale commercial robotics manufacturing facility. The first 25,000 commercial units are already confirmed, starting with the Metaplant, and we are utilizing additional industrial and logistic partners. Let me give you some dimensions on the opportunity. Boston Dynamics is now part of the group. We're building a spot and stretched robots and soon will be mass-producing atlas humanoid robots. We have existing potential distribution for selling robots through our dealer partners, and Hyundai Capital is exploring the feasibility to finance sales of robots, development, production, distribution, sales and finance for robotics. Ladies and gentlemen, this is the power of the group. All of that sits inside the largest commitment we have ever made in America, $26 billion between 2025 and 2028 and 25,000 new direct jobs, a new low carbon steel mill in Louisiana, $5.8 billion and 2.7 million tons of capacity supporting 5,400 jobs directly and indirectly. U.S. robotics production started in 2028 with 30,000 units of annual capacity. We will have more to say about the site soon. As was supported last week, we need more production capacity. We are actively looking for opportunities. The decision is not yet final. What is final is the direction because we have committed to building more than 80% of what we said in America in that country by 2030. And we cannot do that without more capacity. We began as a Korean company that is global. In the United States, with thousands of people working with us and our ecosystem from Alabama and Georgia to Michigan and California, we have begun a part of the fabric of America. Now the data and the math, all of this is what makes it work, and nobody understands that better than my colleague. Please welcome Minwoo Park, Head of our Advanced Vehicle Platform Division.

[Interpreted] Hello, everyone. I'm Min-Woo Park, Head of AVP Division at Hyundai Motor Group and CEO of 42dot. Today, I would like to share the new competitive strength HMG is building for the AI era. Let us first consider the changes we are already experiencing. You may remember when ChatGPT first emerged, it was remarkably natural in conversation, but at times, it also gave unexpected answers. But today, ChatGPT delivers an entirely different level of experience, more accurate, faster and far better at understanding context. So what has changed? Advances in AI models in computing were important. But more importantly, real-world users was turned into data and fed back into AI improvement. YouTube works in much the same way. It learns what we watch and what we keep, then recommends more relevant content. The common really is simple. The more it's used, the better it becomes. This is the data flywheel. The basis of competition is now changing as well. We can capture more real-world experience, identify meaningful data within it, connected more quickly to AI learning and turn it into better products. This will be the new basis of competition, and the automotive industry is no exception. Vehicles too must evolve from products whose capabilities are fixed at the delivery into products that learn and improve through use. In the past, vehicle performance, manufacturing scale and quality, we're at the center of competitiveness. Going forward, beyond these fundamental factors, what will matter is how quickly companies can accumulate data and connect it to AI learning and better services. Global leaders are also looking beyond in division vehicles or the production of specific technologies. They're focused on building data fly wheels, that continuously accumulate data, learn from it and improve performance. Hyundai Motor Group's transition to STBs is ultimately about securing data-driven competitiveness. To the sense over the past years, Hyundai Motor Group has built the core technologies, data infrastructure needed for this transition. Starting this year, we're beginning to collect data from production vehicles in real-world road conditions. We're now entering the next piece, using that data to improve AI models and services. Today, I will first discuss the technology foundation that enables the data flywheel, I will then explain how data is collected and translated into AI improvements in in-vehicle experience in EV. Finally, I will explain how Hyundai Motor Group's global sales scale in AI infrastructure will expand this system. To make a data work, flywheel work, we need a technology foundation that can collect data, train on it and deploy improvements back to vehicles and services. In other words, everything from vehicle architecture to data, AI validation and OTA mostly connected as one system. Hyundai Motor Group has focused on building this foundation over the past years. First, we developed CODA, our next-generation E&E architecture to transition vehicle computing and control to an STB-based structure. This enables us to continuously improve software and functions through OTA opts after delivery. For the in-vehicle experience, we developed PLEOS Connect, our next-generation infotainment system and Gleo AI on agent AI for vehicles. We began deploying them in production vehicles. In autonomous driving EED, we are developing Atria AI at our proprietary end-to-end autonomous driving model. To support this, we're also standardizing ED sensor systems across the group and building a foundation to collect and use driving data in an integrated way. Together, these technologies and systems form the foundation of the data flywheel, data collection, learning, improving and deployment. Let me now explain how data collected from actual cars leads to AI improvement. The starting point for in-vehicle AI is the customer's real-world experience. Starting with the PLEOS Connect and Gleo AI are being deployed in production vehicles. as customers interact with their vehicles, data on vehicle use patterns, trends, in the context it what AI services are used is beginning to accumulate, use data in an anonymized form with customer consent. Agentic AI for vehicles is different from Generative AI service. To provide the functions customers want without compromising safety, it must understand the vehicle's condition, driving situation, passenger intent, safety requirements and regulations as a whole. That level of understanding can only be achieved as diverse data accumulates over time. It begins with customer behavior data, showing which functions are used and how often. When this is combined with local data like language, regional usage items and lifestyles, the AI can better understand local content. It can also improve service quality in each market and support the growth of local app ecosystem. When vehicle data like driving speed, control status and since their information is added, it becomes even more valuable by connecting customer behavior with the real world contract. With this data, we can see which features customers use most, where they face inconvenience and even why they use certain functions in particular situations. This is how we gain a holistic understanding of vehicle conditions, driving situations, passenger intense and safety. From the HMG continuously analyzes key performance metrics generated as customers use Gleo AI, which enables us to identify technical improvements to deliver faster and more accurate responses. Customer needs and improvement opportunities identified from data either directly or indirectly are reflected in enhancements to Gleo AI and the development of new PLEOS Connect features in compliance with AI ethics guidelines. The results are then deployed back to vehicles to OTA. As this improved Agentic AI is delivered back to customers, greater use generate more data. That data improves the AI and better services drive further customer uses. The Virtus cycle is now beginning to operate in a mass production environment. In autonomous driving, we're also building a system that collects data and learns through the same virtuous cycle. Autonomous driving performance depends on how effectively we collect and learn from variable challenging as cases. Hyundai Motor Group is, therefore, focused on securing this type of data. First, based on the NVIDIA ecosystem, we are standardizing sensor systems across the group, which allows us to integrate and use data from HMC, Kia, 42dot and Motional under a consistent framework. Building on this foundation, we have established a data union with global partners like NVIDIA, enabling us to use large-scale driving data accumulated through diverse autonomous driving operations. In addition, Atria AI will be deployed in the pilot program that will begin later this year, which will allow us to directly collect critical key data for further model improvement then in 2028 through our partnership with NVIDIA, we will introduce Level 2+ autonomous driving technology in our first production STB and begin collecting driving data at scale. And then well analyze all of this driving data through dashboard. We will review recent issues and quantitative metrics to determine where performance improvements are needed. For example, we track a range of metrics like system stability across various scenarios and automated parking performance to monitor ongoing improvements. In particular, when critical issues or unusual cases are identified during the evaluation process, use studied are collected to enhance Atria AI and then verify how much the quantitative indicators have improved. The improved Atria AI will be rolled out to customers, enabling more people to enjoy safer driving experiences. Ultimately, we aim to expand Atria AI across production vehicles from 2029 onward and build the 4 EED lineup from L2+ to L4. So far, I've described a structure that captures data identified meaningful data and translate that data into better AI. The important question now is how far we can scale it. When these technologies are integrated into a full stack STB product, a software and AI-centric technology stack, will expand across products, fleets and compute infrastructure, creating new demand for computing capacity. This requires large-scale storage in compute infrastructure. This is where the flywheel begin to scale. Hyundai Motor Group's greatest strength in scaling this structure is our global sales volume and business network. We sold more than 7 million vehicles annually and operating over 190 countries worldwide. As STB architecture and standardized sensor systems are deployed in more production vehicles, we will experience in data from diverse countries and road conditions will grow rapidly. But the key is not simply selling more cars. What matters is how quickly we increase the share of vehicles that collect and use data through the same structure. Accordingly, starting in 2028, HMG aims to apply standardized sensor systems and AI computing platforms to mass-produced vehicles and continue expanding their adoption. Through this by around 2033, expect to surpass our competitors in cumulative data volume. Beyond scale, we also expect to build a differentiated competitive advantage in the quality and diversity of our data. As data begins to grow, the infrastructure to process it and train on it must expand as well. Today, we flexibly secure the computing resources we need through both our Kazan data center in Korea and cloud partnerships. Then from 2029 as AD data begins to grow sharply, we plan to bring online a 100-megawatt AI data center in Saemangeum capable of housing more than 50,000 TEUs. This is about more than scale. It represents the completion of an independent infrastructure that can process and train on vast amounts of globally collected data in-house without relying on external clouds while internalizing the full process data collection validation deployment. So Hyundai Motor Group will organically connect data accumulated through its global manufacturing system in-house AI and the infrastructure that supports it, strengthening our long-term data-driven competitiveness. The competitiveness of the future mobility industry will be determined not by any single technology, but by the ability to collect data, learn from it and translate it into better customer experiences. Hyundai Motor Group is steadily building a data collection system based on our global fleet scale, in-house AI models and the robust infrastructure to support them. Throughout this process, the values we consider most important are utility and reliability. We will use data to understand what customers truly need while delivering experiences that receive and reliable enough for them to use with confidence. These capabilities will not be limited to vehicles. Over time, they can provide a foundation for manufacturing, robotics and beyond. Of course, building a data flywheel and internalizing AI capabilities cannot be achieved overnight. It's a journey that requires cooperation with governments, local authorities and partners across industries as well as the recruitment of outstanding talent. Guided by these principles, we will continue to advance our capabilities in data, AI and infrastructure.

Next, ChangHwan Kim, EVP, Head of Electricity and Energy Solutions tech unit will speak about our better technology and strategy.

[Interpreted] Good afternoon. I'm ChangHwan Kim of Hyundai Motor Company. Of new customer experience and safety, which are the utmost value, Hyundai Motor has always strived to internalize core technologies. In our own steadfast ways, innovations were achieved on the independent development of our hybrid systems to EV dedicated E-GMP platform now running on roads around the world. Can this drive towards electrification and mobility leadership has consistently advanced toward the future. And at the center of this transition to electrification is battery and the key to deciding the future of its competitiveness is also the battery. Last year at CEO Investor Day, I've explained by Hyundai Motor's electrification technology, and our acceleration strategy. Today, I would like to share the result of such efforts, how our proprietary technologies offer differentiated customer experience and next level guarantee safety in the EV era. Please allow me to introduce our battery technology excellence. Batteries are now no longer a power source that stores energy. Hyundai Motor's battery innovation goal is very clear. It's to create a perfect customer experience and put safety first, a harmonious fusion of these 2 core values. Our batteries are designed to have sell systems and BMS meshed together perfectly as a single intelligent organism, which raises the fundamental standard of EVs. Innovation and customer experience includes performance, price and durability, a perfect balance across these 3 dimensions. Cars marketability is decided by its driving range and charging speeds, which we offer as convenience ability experience to customers with innovative optimized design, we secure price competitiveness that satisfies everyone. Furthermore, over the long span of vehicle ownership, the battery performance is maintained, thanks to our long-life technology, protecting the customers' asset value. The completion of such overwhelming performance and economic value can only show its true worth when the highest safe technology is secured our customers. Hyundai Motor has secured the ultimate thermal propagation prevention technology, thermal runway protection, TRP in short to every battery form factor and chemistry. Through this, we wish to earn customers' trust being a safe EV by fundamental innovation in technology that satisfies uncompromised performance, durability and safety, we intend to present a new standard unprecedented in the world. The driving range, power output and charging speed that EV customers experience all begin with the performance of the battery cell. To extend the driving range, we must pack as much energy as possible into a small space and to achieve high energy efficiency, we need to reduce battery weight, this requires high energy intensity. However, conventional batteries had limitations, increasing energy density resulted in reduced power output and slower charging speeds while boosting charging speed and up with compromised energy density. Furthermore, hard performance EVs previously had no choice but to carry larger battery packs, simply to increase power output based on design capabilities built and internalized over a long period, Hyundai Motor has successfully developed a proprietary high-performance battery cell that simultaneously achieves both high energy density and high power output. This is on the in-house design battery cell maintained the same energy density as the battery is hardly used in our E-GMP platform EVs, it delivers to the power reduces charging time by over 40% and significantly low internal resistance, there are improving cooling performance. You can easily understand this differentiated performance from the diagram on the right. Compared to the fast-charging LFP batteries with under 10 minutes charging time recently announced by competitors, and Hyundai Motor independently developed battery maintain high energy density and power output. This delivers the key advantages of securing long driving ranges and generating high output even with a smaller battery pack. The compact get powerful battery independently designed by Hyundai Motor, which I just explained, will be installed in our EREV launching next year. EREV standard range EV carries a smaller battery compared to standard EVs and generates additional electricity via an internal engine, enabling a driving range of over 900 kilometers. Generally, EV power output is proportional to the number and capacity battery cells, making it difficult for EREVs which carry fewer batteries to achieve equivalent performance level. However, the performance battery packed in this EREV achieves equivalent power output and driving performance is to IONIQ 5 EV, even with less than 50% of battery capacity. In this way, through our accumulated experience in R&D capabilities, Hyundai Motor's battery solution dramatically reduces vehicle weight to maximize energy deficiency, secures more spacious in terrarium and fully delivers the quite dynamic driving unique to electric vehicles directly to our customers. Recently, a vast majority of customers considering EV place high priority on price to accelerate EV mass adoption and offer a wider range of choices to customers, Hyundai Motor has previously utilized 2 battery chemistry types, high nickel and NLP is strategically introducing mid-nickel NCP batteries into our line of offering both optimal performance and outstanding cost efficiency. Our mid-nickel battery services a critical solution for securing price competitiveness. It offers a price point LSP while delivering high energy density. In other words, within the same battery pack volume, a mid-nickel battery can load 100% edge capacity, whereas NLP can only load approximately 70%. Compared to the fourth generation of high NCM battery currently used in IONIQ 5, it is 30% lower in cost. And in Europe, the price gap with LFP is within 10%. Therefore, to meet diverse customer needs moving forward, we will offer a tailor-made battery selection, high nickel performance batteries customers seeking high performance and high charging, met nickel batteries for value-conscious customers and LFP batteries for entry-level segments and regions requiring ultra-low pricing. The mass production vehicle integration of the mid nickel battery will begin in the first half of year. And from 2028 onwards, it will be widely adopted across volume models playing a key role in securing the cost competitiveness of our EREVs. Hyundai Motor is actively pursuing the development of next-generation battery technologies, including all solid-state batteries, alongside the various chemistry-based solutions. This will service the core driving force to further strengthen our electrification loyalty competitiveness moving forward. The field durability of Hyundai Motor's batteries developed in this manner is clear proven by real-world driving data from customers across the globe, analyzing data from an IONIQ 5 that drove over 400,000 kilometers in Korea, revealed that its battery state of health remained at an average of 95% compared to a brand new sale. Furthermore, according to started by European automotive media outlet in '26 analyzing the residual lifespan of 34 EV models aged over 2 years, our group ranked highest with 99% and 98%, not resting on this world class durability, we aim to advance the technology to the next level. Accordingly, starting in 2028, we will apply various new BMS technologies currently under development by Hyundai to improve battery life span durability by more than 20%, and for consistently differentiated lifestyle, starting with GV90 we will put an application. And our cloud connected BMS will constantly evolve based on vehicle big data. The outstanding performance, reasonable cost efficiency and unwavering durability I described earlier, at the center of all these remarkable technological achievements lies Hyundai Motor's highest priority in absolute value, which is customer safety. As shown in video, when an abnormal behavior occurs in a single battery cell causing a short circuit, thermal propagation typically spreads the adjacent cells. The thermal runaway protection technology developed by Hyundai Motor, which I am introducing today ensures that even if a short circuit occurs in one cell, heat will not propagate to neighboring cells. Security over 60 patterns and specialized know-how, Hyundai's proprietary TRP technology prevents thermal runway across all cell form factors whether prismatic or pouch, designed to allow customers to use EVs with total peace of mind, Hyundai's innovative safety technology operates meticulously in step-by-step stages. First advanced BMS status in real time and precisely diagnosis in the anomalies. If abnormal cell behavior occurs, the system detects it and immediately notifies the customers to enable proactive measures. Even if an unpredictable physical short circular occurs and escalates into an event, the TRP applied battery controls high temperature heat and smoke dispersion, fundamentally blocking thermal propagation to adjacent cells and concludes the event safely by discharging smoke for a short period. And this video demonstrates technology and actual operations. As you can see, even in cell experience is a short circuit and catches fire internally, the fire does not propagate to adjacent cells as this concludes after releasing smoke to the outside. Hyundai's proprietary TRP technology was achieved through over hundreds of rigorous tests and design refinements by our researchers, uncompromising when it comes to our customer safety, we established a safe technology test building within Namyang R&D in 2023, refining a perfection of a thermal runaway protection technology through thorough precise validation under real-world driving conditions. This unrivaled thermal runway protection technology realized countless trials in its regions. Well, first, we apply to Hyundai Motor's top-tier luxury flagship model the Genesis GV90 announced last week. To maximize safety value of our customers -- for our customers, we will rapidly expand this crucial and innovative protective feature across all vehicle classes and lines by continuously securing battery technology solutions across all -- across our entire vehicle lineup and the motor will establish top-tier safety leadership in the global EV market. Today, we shared Hyundai Motor's current battery technologies, our upcoming road map strategy and our future vision. From securing cost efficiency to drive EV democratization to market-leading unique performance and top or safety features that protect customers under any circumstances, Hyundai Motor's better technology is continually advancing toward the ultimate mobility era. The all destination of all these remarkable technological achievement is people and the innovative experience that our customers will enjoy. Our innovation will not remain confined to current battery electric vehicles but will boldly extend into all areas advancing human ability, including upcoming robotics and diverse future robotic solutions. Thank you very much for your time and attention.

Next, I'd like to invite the Executive Vice President, Scott Lee, Head of Finance Division to present on our mid- to long-term profitability targets and shareholder return strategy.

[Interpreted] Hello, everyone. I'm Scott Lee, EVP and Head of the Finance Division. How did you find the all your presentations by the CEO and other management members, I hope they provided a clear understanding of our strategy. Let me now turn to the financial presentation, beginning with our mid- to long-term profitability targets. This year, we are operating amid exceptional uncertainty, including the war in Iran and supplier related issues. It's a year that demands agile responses to unpredictable challenges. At the same time, we faced a difficult business environment marked by competition and persistent geopolitical risks. Even so, we are delivering meaningful results in the U.S. and other global markets, hybrid sales have exceeded the target, reducing a record sale of total sales. For the remainder of the year, we will optimize our mix on the back of strong hybrid momentum and maximize the new product cycle for Avante to sign a GV80 hybrid through these efforts, we remain focused on delivering the OP, operating margin guidance of 6.3% to 7.3% announced at the start of the year. That said, given the unpredictable macro environment and heightened business uncertainty, we will continue to community closely with the market on our future profitability direction. Let me now turn to our mid- to long-term operating margin target. And last year's CEO Investor Day, considering changes including tariffs, we presented a 2030 OP target of 8% to 9%. Today, supported by strong hybrid momentum driven by our product competitiveness as well as our company-wide cost reduction road map, revising our 2030 OP target to 9% or higher. As announced earlier, we are maintaining our target for electrified vehicles to account for 60% of total sales by 2030, reflecting global demand and the competition, we have recalibrated our partner mix. By expanding the share of hybrids, which generate above-average margins, we're not only raising our OP target but also increasing other consolidated OP by 11%. Strengthened hybrid light up is central to this improvement. Last year, we launched the policy hybrid, the first model equipped with our next generation hybrid system. This year, as you can see, besides lease, we will begin with the GV80 hybrid and expand our premium hybrid lineup on the Genesis brand. From there, we'll rollout our next-generation hybrid system in full, building a hybrid lineup of all segments from affordable high risk in smaller segments to premium hybrids in larger segments. This will enable us to pursue both volume growth and higher value growth while continuously improving hybrid profitability. In total, we will pursue company-wide cost reduction efforts, including material cost reductions and next-generation technologies to maximize profitability and achieve an OP margin of 9% or higher by 2030. Let me now turn our cost reduction roadmap. The second key driver of profitability improvement. To respond with resilience to changes in the internal and external business environment including tariff and intensifying competition and to secure future competitiveness, we've been pursuing a fundamental transformation of our cost structure since the beginning under strong company-wide leadership. Going beyond our ongoing cost reduction activities. It's a company-wide strategic cost road map built through the anticipation of collaboration of every function. Of course, quality remains a core strength on which we will never compromise. We will transform our cost structure comprehensively to achieve our strategic cost reduction targets without sacrificing quality. First, will drive cost innovation across the full vehicle life cycle. In the past, cost reduction was focused on the new vehicle development stage going beyond all optimized cost across the entire life cycle from development to post launch. A development will maximize commonization across manufacturing and design to secure cost competitiveness from the outset. For vehicles a bedding production, we will identify new cost innovation opportunities and roll out those improvements globally, improving the profitability of existing models will improve efficiency in production and service processes, establishing a lifecycle wide cost management system. Beyond production process optimization, we will enhance manufacturing efficiency to strategic equipment upgrades will also improve our E&E architecture by integrating in vehicle controllers, reducing their number and expanding the scope of OT update will significantly improve serviceability through enhanced high-volt battery structure for EV and the application of new technologies through this life cycle cost innovation strategy will reduce our cost of sales ratio by 1.5 percentage points by 2030. At the same time, we will strengthen the cost competitiveness of both hybrids and EVs to structure cost improvements. We will introduce a diverse hybrid lineup from premium hybrids, including Genesis to affordable hybrids optimized for each market, broadening our reach across segments and price points while sporting market share growth beyond incremental component improvements or innovate the hybrids them itself. By 2030, we expect to reduce the material cost of hybridization relative to ICE by 20%. For these we will build economies of scale by strengthening regionally optimized lineups, not only in advanced markets with models like IONIQ, our first EV designed for Europe, but also in emerging markets like India. Also, we'll expand the use of cost-effective batteries, including NLP and develop next-generation motors and inverters, through PE system development, we aim to reduce EV material costs by 30% by 2030. By delivering on this material cost road map, reduction road map, we aim to reduce our cost of sales ratio, i.e., further 1 percentage point by 2030. Finally, let me address our localization strategy, discussed all year. We're strengthening our localization strategy. We will identify and expand local supplier networks, what will secure supply stability, reduced logistics cost and mitigate regulatory exposure. Also by improving utilization and new plants to reduce fixed costs and by optimizing manufacturing specs and processes, this will improve the cost structures of major plans to HMC's best levels. In emerging markets and other price-sensitive regions, we will optimize vehicle specs to meet local requirements. We will also actively leverage the local operations of global suppliers that meet our quality standards, through this, all established optimal cost structures globally and regionally, reducing cost of sales ratio by a further 0.5 percentage points by 2030. The 3 pillars I've outlined life cycle cost innovation, material cost reduction and localization will reduce our cost of sales ratio by 3 percentage points by 2030. Let me now turn to our shareholder return policy. In 2020, we announced our loan to shareholder return policy. Since then, through the value program announced in 2024, we have continued to strengthen our efforts to enhance corporate value. So our total payout ratio has risen from 26.3% in 2021 to 35% in 2025. Let me now outline our shareholder return plan for 2026. Even amid rapidly changing business conditions and growing macro uncertainty, will continue to deliver on our previously announced shareholder return policy. First, we'll maintain our target of a TPR of at least 35%. To ensure clear communication with the market, we've changed the English term from TSR or total shareholder return to TPR or total payout ratio. This is a change in terminology only. Our target remains unchanged. Second, to enhance the visibility and stability of divisions, we will maintain our interim dividend of KRW 10,000 and our quarterly dividend policy. Third, we plan to cancel all treasury shares currently held except for the shares approved by the General Shareholders' Meeting for employee share-based compensation. We'll continue to deliver a consistent and predictable shareholder return policy.

This concludes the financial presentation. Please join me in welcoming CEO, Jose Munoz back to the stage.

Thank you, Scott. Everything you heard this afternoon rest on something no other automaker has. More than 70 group affiliates, about KRW 477 trillion of group revenue last year, 305,000 people, steel parts, logistics, finance, construction, robotics, when we decide to move, we can move the whole value chain. And we do it while keeping a promise that matters more to me than anything on these slides. We have donated $320 million for pediatric cancer research since 1998. Now expanding into India and Europe. We have helped save more than 40,000 lives. More than 2 million trees planted across 13 countries, 945 tons of marine waste recycled into vehicle components and 100% renewable energy across our sites in North America, Europe and India. Let me leave you with where we stand. Record revenue for the 2025 financial years and again in the first half. Market capitalization, 2.3x last year's average. Third in the world by volume; second, in profit. 5.55 million sales by 2030 with 60% electrified and margin above 9%. More than 100 launches, 127 million units of new capacity and a total payout ratio of 35% or better through 2027. And the products, the all new Tucson, Santa Fe EREV, the GV80 hybrid, the brand-new GV90, and a new decade for Genesis. Our fundamentals are strong. Our strategy is clear. Our team is energized. And with your continued support, I am confident about what comes next. Thank you for your time, your trust and your partnership. It is a great time to be with Hyundai Motor company. Thank you very much.

[Foreign Language] The Q&A session will follow shortly. We kindly ask you to remain seated while we prepare for the next session.

Good afternoon. I am the moderator for the Q&A session of Michael Yun of IR Group. We'll now begin the Q&A session of 2026 CEO Investor Day. I would like to first begin by introducing the management that is participating in the Q&A session. First, the CEO and President, Jose Munoz; EVP President, Minwoo Park; Head of GSO, Heung Soo Kim; Head of Global Business Operations, Li; the CFO, Scott Lee; Head of Electrification and Energy Solutions, Chang Hwan Kim; and Head of IR Department, Zayong Koo. Now we'll begin the Q&A session. [Operator Instructions] So I think we have a question on the right-hand side, [indiscernible] from JPMorgan.

I'm [indiscernible] of JPMorgan. I have 2 questions for you. First is in the U.S., you said that you are switching your portfolio to hybrid. And the uptime rate, however, despite -- because of that, the battery plant uptime rate will not be as high. And some competitors are selling these JVs due to this. So do you have any mid- to long-term strategy for your JVs for batteries? Second question is for Minwoo Park. The Atria AI, if you apply that to the vehicles, the electricity consumption is going to be pretty high. So in hybrid or ICE model, will there be restrictions? Or will it be regardless of the powertrain? Will AV be possible?

Concerning the strategy in the United States, as I said, it's very simple. So we need to provide the customers what they want, right? And given the current condition in terms of the regulation and then the customer demand and the particular situation in the U.S. market, definitely, hybrid is the biggest opportunity. Not only the total market is growing, but we are growing way more than that. So you've seen that in Q2 alone, about 70% of our growth in the hybrid models because they are highly competitive in terms of performance and in terms of cost. And most importantly, for us, also in terms of profitability. So that's why one of the simple ways to enhance our business is to focus, increase capacity, launch new hybrid models and sell more. Concerning the battery, the JV, so you may have noticed that also unlike some of our key competitors, we have not stopped our investments on electrification. We have simply adjusted to the reality. And in HMGMA, for example, we are not only producing EVs, but we started production this year also on hybrid models. So we are performing well on EVs. The performance of the IONIQ 5 is very strong. The key point to highlight there is if you noticed in my presentation, linked with the growth of additional business on robotaxis, we have signed a contract with Waymo, and we are going to start delivering IONIQ 5 in our plant in HMGMA, which obviously utilize the batteries that we built in our plants for robotaxis. These contracts are very significant, and I also announced today that we are increasing the scope to international markets. And all those units are going to be produced also in HMGMA. So I think this is the very simple answer to your question. Simply, we try to sell more on all domains, but especially robotaxis are the new -- is the new channel that is going to help a lot.

I'd like to answer your second question. I think that was a very sharp question. It's shifting to ICE, the AV computer, would it be well operated with stability compared to EV and hybrid, it could be a bit more complicated. That is true as well as in terms of control, the trajectory that is offered by AV to follow that, doing that in ICE and doing that in EV is very different. So for ICE models, the control optimization would be required for sure. And because of that -- but because of that, AV performance or stability, it won't be -- it won't have a big of a gap. But in terms of key characteristics, for example, how it switches lanes or how it fastly runs at the back end, the control logic will have to be optimized as much as possible. In that sense, we have the control experiences accumulated with ICE engines, and that will be helpful to us. And the gap between EV and ICE, how that can be bridged controller would be a key aspect. The experiences that have accumulated, if that is well used, I think it will be a good solution. And if I could elaborate further, the various -- the coolant for example, is going to be called by air or water, it's very different depending on the model, whether it's air cooled or water cooled. So for the ICE engine, there are also restrictions due to this and how that is going to be configured would be another key factor. And our team is currently working on that.

Next question, please. So [indiscernible] from Samsung Securities.

Hello. This is [indiscernible] from Samsung Securities. I have 2 questions. First, is on robotics. The other is about battery. So at this year as CEO, robotics feature was announced, we had high expectations. So in the previous shareholders meeting, robotics has now been included in your business scope. Like training center, production plans, post dynamics, sales robotics business will be operated by your subsidiary, I guess, Physical AI requires a huge amount of resources. So if you just pursue with subsidiaries only, HMC only has auto business. So it's not going to lead to a lot of valuations a lot. So that's the reason behind this business structure. Can you elaborate on this? And according to what we know RoboticsLAB, will kick off production of potable robotics linked to revenues. Then RoboticsLAB will be enough? Do you have this plan? And the other question is about battery. From next year, year will be mounted with battery that's going to be scaled out to robotics. And by 2030, is it that HMC will produce batteries? Or are you going to outsource that just like hybrid and how much internalization rate will you have in terms of cost reduction material cost will be brought down by 1%. You said and EV and hybrid will make significant contributions. Can you elaborate on this?

Thank you very much for your question. On the robotics, to tell you that, as you know, HMC is the main investors. So the HMC is not the company that is running the robotics, but is the company that is supporting thanks to the structure of the group, all the ecosystem development of robotics, and is supporting with finding the facilities, finding the utilization, the application and then providing to the robotics company, all the expertise that the robotic company today doesn't have like manufacturing expertise like safety, like quality, durability, reliability, cost management, mass production, et cetera. So the structure is like this because the companies are, for the time being, separated companies. I don't know what the future will bring in that area. But then to add to those activities. I would like to invite our EVP in charge of robotics, HS Kim to give us additional information.

; Yes. Thank you for your question. As mentioned by Mr. Munoz about the overall business structure. So only this year at the CES, we announced that robotics, overall robotics innovation will be implementing to our manufacturing. So it's intertwined with one another. And to that end, there are so many capabilities required, which will be done based on the cooperation with HMC, which will continue, which is on track. But as you asked, the business scope in the articles of incorporation to implement this, that does not really require the change of the articles of incorporation. As explained by Mr. Munoz, those are separate entities at the moment. So you could interpret that way. And robotics spin-off possibility. You asked about it across the group, robotics dynamics, robotics dynamics, Spartech, a cluster, all these, they work on robotics and the products, as you know are turned into mobility and service robots was about the spin-off possibility yet things have not been decided. But if we make an intolerant decision, we are going to communicate that with the market.

Thank you for your question about battery. As you said the battery, which will be mounted to EREV, we're working on this. We do have our own internalized technology you said about hybrid design will be done by HFC and manufacturing will be done by James. That model is now being implemented. So at HMC, we are an auto mobility service provider. So about battery -- it's not about in-house development. You said in terms of performance, cost, volume, safety, durability, there are requirements. If these requirements are met, when we make cars or robotics or future battery packs, if it's enough well on those fronts, yes, we could provide an easy answer, but our own performance level we need and cost levels to have enough competitiveness. Of course, we want -- if we want to have differentiation in engineering, design and manufacturing, we need to have relevant capabilities. We'll need to make preparations in terms of technology and so on. You could interpret that way.

We'll take the next question. Okay. We have KB here.