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Hyundai Rotem to play a big role in railway industry hydrogen transition

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Last month, the Ministry of Trade, Industry, and Energy announced the launch of the ‘hydrogen electric tram demonstration project,’ which would invest 42.4 billion won (the government’s 28.2 billion won) by 2023 to commercialize hydrogen trams.

This project was created with the goal of expanding the area of hydrogen mobility beyond vehicles to railroads and preoccupying the worldwide eco-friendly tram market in order to achieve carbon neutrality.

The hydrogen tram, which is developing as a viable alternative to the train, provides the required electricity for train operation via a hydrogen fuel cell placed in the vehicle. Furthermore, compared to hydrogen vehicles, hydrogen trams are a high-level industry that demands great durability, and the worldwide business is still in its infancy, with no clear leader. Currently, major nations such as Germany and Japan are supporting hydrogen tram demonstrations in preparation for commercialization.

Hyundai Rotem, a company that specializes in the railway industry, will oversee this project. Furthermore, five small and medium-sized railway parts businesses, including Maxis (motor), Core Chips (sensor), Purum KD (braking), SJ Steel (body), and A&M Mecatec (cooling), collaborated to develop the hydrogen train industry organically. challenge From September this year until the end of 2023, this project intends to commercialize a 380kW hydrogen tram, which is comparable to four hydrogen fuel cells (95kW) for Nexo, and to secure fundamental technology in four important sectors.

From 2023, the government aims to construct a hydrogen refueling station for hydrogen trams by next year and test the best driving pattern in terms of fuel economy while travelling for more than 2,500 kilometers in Ulsan. Following that, it plans to begin mass production of hydrogen trams in 2024, paving the way for local and international markets. Hyundai Rotem’s technology will allow it to commercialize hydrogen trams in a short period of time, giving it a competitive advantage in the worldwide eco-friendly rail industry. According to the Ministry of Trade, Industry, and Energy, the market for hydrogen fuel cells to replace traditional power sources in railway vehicles is anticipated to rise to 700 billion won in 2025, 4 trillion won in 2030, and 18 trillion won in 2050.

Furthermore, Hyundai Rotem recently inked a commercial deal with Samcheok-si, Gangwon-do, to develop a liquid hydrogen value chain. This is the first instance of a major company recruiting large firms to manufacture and develop liquid hydrogen storage goods, and it is expected to have a significant linking impact with the liquid hydrogen sector that Gangwon-do is presently promoting aggressively.

Hyundai Rotem plans to provide a ‘integrated solution’ from design, construction, and maintenance by localizing a hydrogen extractor, a device that extracts hydrogen, and hydrogen charging facility technology required for building a hydrogen charging station, beginning with its announcement of entry into the hydrogen business last year. It intends to contribute to the development of the hydrogen industry ecosystem and the expansion of the liquid hydrogen value chain in the future by bolstering its capacity to comprehensively respond to the hydrogen market’s demand, such as through the development of liquid hydrogen charging stations, hydrogen electric trams, locomotives, and high-speed trains. Local governments and major businesses, in particular, are required to collaborate to establish a win-win hydrogen industry virtuous cycle ecosystem to ensure industrial competitiveness and regional growth.

Hyundai Rotem’s current major business is the rail solution sector, which produces railway vehicles such as high-speed rail and light rail, as previously said. Furthermore, the defense sector is in charge of ground weapon system R&D and manufacturing, while Eco is in charge of steel, automotive, and hydrogen infrastructure. The plan business section is part of it. The share of sales in the hydrogen industry is anticipated to reach 2% by the end of this year.

In the third quarter, Hyundai Rotem is projected to record strong earnings. In the third quarter of this year, Hyundai Rotem expects sales, operating profit, and net profit to be 711.5 billion won, 27.9 billion won, and 15.4 billion won, respectively.

The reflection of order backlog in sales is delayed due to delays in the railway production process, and raw material prices and increases in logistics expenses for the Australia and Egypt projects are also thought to be severely hurting earnings. However, it is anticipated to pay attention in the mid- to long-term to whether the hydrogen industry and K2 tank export are successful.

“New orders for hydrogen reformers are limited this year, at 60 billion won, but gradual business development is predicted, and the area will also extend to hydrogen charging stations,” said Jeong Dong-ik, a researcher at KB Securities. A decision on whether or not it will be successful will be made as early as next year.”

Hyundai Rotem’s yearly operational profit, in particular, is anticipated to surpass 1 trillion won from 2016. (106.2 billion won). From the previous year, sales, operating profit, and net profit are anticipated to rise by 2.4 percent, 22.05 percent, and 129.91 percent, respectively, to KRW 2.85 trillion, KRW 100.2 billion, and KRW 51.5 billion.

It had previously posted operational losses of 16.2 billion won in 2018 and 279.9 billion won in 2019, but managed to generate a profit last year (82.1 billion won). “The benefits of domestic medium- and high-speed trains, including GTX and KTX-Ieum, continue to benefit,” said Dongheon Lee, a researcher at Daishin Securities.

Hyundai Rotem is being transformed under the leadership of CEO Lee Yong-bae, who assumed office in December 2019. Lee Yong-bae, the CEO of Hyundai Motor Company, is a Hyundai Motor Group representative financial specialist who has served as head of the Planning and Coordination Office 3, executive in charge of planning, management support, finance, and buying at Hyundai Wia, and CEO of Hyundai Motor Securities.

In 2016, he was brought in as a relief pitcher to help Hyundai Motor Securities improve its financial stability, and he was successful. Hyundai Rotem has been normalized, and the company is once again garnering attention as a “innovation specialist.”

Arnes Biogradlija
Creative Content Director at EnergyNews.Biz

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