Kia Motors Corporation has announced the details of ‘Plan S’, the company’s mid- to long-term strategy that was formulated with the aim of securing the brand a leadership position in the future automotive industry. Plan S has a broad canvas, covering autonomy and connectivity as well as electrification and mobility services.
The Plan S strategy signals Kia’s shift in focus from an enterprise that is focused on internal combustion engine vehicles towards one that focuses on electric vehicles and customized mobility solutions. The company is carrying out this brand innovation and profitability enhancement plan with the purpose of supporting its two-track Plan S strategy that seeks to prioritize electric and autonomous vehicles as well as mobility services.
At the company’s recent CEO Investor Day in Seoul, in addition to its 2025 financial and investment strategy, Kia announced details of its Plan S to shareholders, analysts and credit-rating agencies a
Kia’s plan is to offer a full range of 11 battery electric vehicles by the end of 2025. With the launch of these models, Kia’s target is to capture a 6.6 percent % share of the global EV market (excluding China), with the company deriving 25 percent of its revenue from the share of its eco-friendly cars. Analysts expect the global EV market to gain traction by 2026, and Kia hopes to sell 500,000 units of EVs on an annual basis and sell at least 1 million eco-friendly vehicles across the globe in all markets (excluding China).
In addition to these goals, Kia plans to offer EV-based mobility services as part of its new business model, thus helping the world to tackle global urban problems like environmental pollution. Kia is also poised become a market leader in the Purpose Built Vehicle (PBV) market, which is expected to grow on the back of expanding car-sharing and e-commerce businesses.
‘Plan S’: Kia’s second-generation future businesses
ü Launch a dedicated BEV model in 2021
ü Establish a full EV line-up of 11 models and reach a 6.6% global EV market share by 2025
ü Sell 500,000 BEVs and one million eco-friendly vehicles by 2026
ü Simultaneously offer derivative EV models and dedicated models with differentiated pricing and specification
ü Nurture key developed markets as major bases for EVs; achieve a 20% sales share out of all Kia models by 2025
ü Selectively introduce EV models in emerging markets; and raise sales of ICE vehicles
ü Adopt development system for EV architecture
ü Achieve EV sales innovation
ü Establish Mobility Hubs in cities with stringent environmental norms and wider use of EVs; and provide eco-friendly mobility services
ü Explore new business models like logistics and car maintenance through Mobility Hubs
ü Operate mobility services based on electric and autonomous vehicles in the long term
ü Lead PBV markets for corporate clients; offer customized PBVs for target customers
The strategy has been formulated with the aim of establishing leadership in vehicle electrification and diversifying its business. By the end of this period, Kia Motors plans to attain a 6 percent operating profit margin and 10.6 percent return on equity (ROE) ratio in order to optimize shareholder value and to secure the necessary capital.
Commenting on the new strategy, Kia Motors President and CEO Han-woo Park said that with the auto industry undergoing a period of turbulent changes, this is just the right time for the brand to radically transform itself into a global enterprise that is dedicated to spearheading customer value-led innovations. He said that Kia Motors will undertake a path of active innovation to tackle future challenges, in order to identify and capitalize on new opportunities that could take the company forward.
CEO Park added: “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. 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.”
The twin prongs of Kia’s Plan S will be to focus on the popularization of electric vehicles, and the expansion of mobility services to include electric and autonomous vehicles, while also entering the PBV business.
The company will be implementing these initiatives with regard to all aspects, which include brand identity, corporate identity, design identity and user experience. Kia’s aim is to make it possible for customers to directly feel, experience, and understand how the company has evolved into one that actively champions EVs and mobility solutions.
Kia plans to reveal details of its new branding strategy in the second half of 2020. One of the cornerstones of the new strategy would be to position Kia as a pioneer in the era of EVs, a brand that becomes the favorite of the millennials and of the Z generation and as a brand that stands for 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.
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