South Korea’s Hyundai Motor and its affiliate Kia are setting their sights on a modest but telling rebound in 2026, targeting a combined 3.2% increase in global vehicle sales to 7.51 million units, as the industry recalibrates around hybrids amid slower electric vehicle adoption.
The two automakers, which together rank third globally by sales, delivered 7.27 million vehicles in 2025, a marginal 0.6% rise from the previous year. The outcome left them just short of their annual targets, underscoring how volatile demand has become as government incentives fade and consumers reassess the cost and practicality of fully electric cars.
In the United States, Hyundai and Kia found an anchor in hybrids. The end of EV subsidies in September cooled demand for battery-powered vehicles, but hybrid sales accelerated, helping cushion the impact on overall volumes. Hyundai, which generates roughly 40% of its revenue from the U.S. market, said it posted a fifth consecutive year of record retail sales there in 2025. Electrified vehicles made up 30% of its retail mix, with hybrid sales jumping 36%, while EV sales rose 7%.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
That performance highlights a broader shift underway in the auto sector. Carmakers that once framed EVs as the singular future are now leaning into hybrid technology as a bridge between internal combustion engines and full electrification. For Hyundai and Kia, the strategy appears less about retreat and more about timing: meeting consumers where demand is strongest, while keeping longer-term electrification plans intact.
Kia followed a similar playbook, prioritizing hybrid growth in the U.S. and reinforcing its position in Europe through higher EV volumes. The company pointed to an uncertain operating environment shaped by U.S. tariff policies and uneven regional demand, factors that have made flexible production strategies more valuable than aggressive volume pushes.
Looking ahead, Hyundai set a 2026 sales target of 4.16 million vehicles, slightly below its 2025 target but above its actual 2025 result of 4.14 million units. Analysts read that guidance as a sign of caution rather than retrenchment. Kim Chang-ho of Korea Investment & Securities said the target suggests management is bracing for a tough business climate rather than chasing headline growth.
Kia, by contrast, is seen as having more immediate upside. The updated Telluride model is scheduled to be produced and sold locally in the United States, shielding it from U.S. auto tariffs and potentially improving margins and competitiveness in one of its strongest markets.
Competition in hybrids remains intense. Toyota, the dominant player, held close to half of the U.S. hybrid market as of November, according to S&P Global data. Hyundai Motor’s share stood at about 13%, leaving room for expansion but also highlighting the scale of the challenge. Analysts argue that expanding U.S.-based hybrid production will be central to narrowing that gap, especially as Toyota already manufactures several hybrid models domestically.
Hyundai has signaled it understands the stakes. The company plans to launch new electrified models and ramp up advanced manufacturing capacity, including an EV-dedicated plant in Ulsan and its Pune facility in India, to better align output with regional demand patterns. In September, Hyundai also said it aims to produce more than 80% of the vehicles it sells in the U.S. within the country by 2030, a move shaped by tariff considerations and supply chain resilience.
Taken together, Hyundai and Kia’s 2026 outlook points to an industry in transition rather than retreat. Hybrids are emerging as the near-term growth engine, offering automakers volume, profitability, and regulatory flexibility, while EV strategies are recalibrated for a market that has turned more selective. In the wake of US President Donald Trump’s apathy toward green energy, the road to full electrification is proving longer and more uneven than once assumed, and automakers are beginning to adapt accordingly.