Hyundai puts $450m into Alabama to build hybrid and range-extender engines

Hyundai will spend nearly $450 million expanding engine production at its Montgomery, Alabama plant to support hybrids and range-extended electric vehicles, an investment tied to the refreshed Santa Fe and the next-generation Tucson. The announcement was made by Alabama officials on October 28, with Governor Kay Ivey's office confirming the outlay.

The range-extender side of the plan has a date attached: Hyundai has already confirmed the Santa Fe EREV will be built at the Alabama facility and reach dealers in the first half of 2027.

What the Alabama money buys

The spending goes into the existing Montgomery site rather than a new factory, and is aimed at widening what the plant can build in powertrain terms. Governor Ivey's office said the investment prepares Hyundai Motor Manufacturing Alabama for the refreshed Santa Fe and the all-new Tucson, and the governor confirmed hybrid versions of the next-generation Tucson are among the plant's future products.

Montgomery already employs around 4,200 people, according to state officials. The expansion broadens the range of work the facility can handle rather than adding a separate production line elsewhere.

The Santa Fe EREV and its 600-mile target

The Santa Fe EREV pairs a conventional electric drivetrain with a small combustion engine that exists only to charge the battery pack, so the wheels are driven electrically at all times. Hyundai's stated target is more than 600 miles of total range, a manufacturer figure rather than an independently measured result.

That 600-mile number is not a battery-only figure. Hyundai has not announced a Santa Fe that travels 600 miles on electric power alone, and the production specifications and official ratings have yet to be published. The same applies to efficiency and price: Hyundai has not announced how much the Santa Fe EREV will cost or how efficient it will be, so both remain open until the production figures are released.

How far the Santa Fe can go on battery charge before the engine starts is likewise unannounced. Hyundai has given a total range target but no battery-only range figure for the SUV.

The appeal of the layout is straightforward: owners can run on electric power alone and, when charge runs low, the engine tops up the battery, so a fuel stop substitutes for a charging stop. The cost is the weight of carrying both an electric drive system and combustion hardware, plus the packaging and maintenance considerations that come with the combination. Hyundai's Genesis GV90 EREV uses the same basic idea.

Hybrids are the bigger part of the plan

The Alabama work sits inside a wider North American strategy. At its 2026 CEO Investor Day, Hyundai said North America would offer more than 10 hybrid models by 2030, with hybrids accounting for half the regional sales mix. Production will be split between the Alabama operation and Hyundai Motor Group Metaplant America in Georgia.

Hyundai has also lifted its North American parts sourcing target to 80% by the end of the decade. Building more electrified vehicles and their components in the region is central to that goal and should soften the effect of tariffs.

For buyers, the practical read is that Hyundai is committing engine capacity to hybrids and range-extenders at the same time as it sells petrol and fully electric models such as the facelifted Tucson. The Alabama expansion is the groundwork; the showroom payoff depends on the Santa Fe EREV's final specs, which Hyundai has not yet published.

The European Union's Environment Committee has voted to lower the 2035 CO2 reduction target for passenger cars to 87.5%, down from 100%, opening the way for more combustion-engined models to stay on sale after 2035. The vote took place on 4 November.

What the committee approved

The 87.5% figure is a reduction against the 2021 baseline, and it gives car makers room to sell more combustion-engine models than the original 100% target allowed. The committee also voted in favour of classing "vehicles running exclusively on eligible fuels" (VEEFs), including biofuels, as zero-emission.

Under the changes, manufacturers would have to offset up to 7.5% of their emissions using credits for EU-made low-carbon steel. A projection by the green lobby group T&E estimates car makers could fill half their sales with extended-range EVs without breaching the new rules in 2035.

Super-credits and the unanswered efficiency question

Companies building small EVs up to 4.2 metres long in the EU would qualify for super-credits under which each car sold counts as 1.4 EVs, letting them sell more combustion models. Ultra-efficient EVs above that size would collect credits worth 1.2 sales, again only if made in the EU.

The committee did not announce the efficiency threshold a model must clear to earn the 1.2 credit. Autocar notes it would likely focus on cars achieving above 4.0 miles per kWh, or 15kWh/100km, but that figure has not been confirmed.

The UK is currently negotiating for models built there to qualify under the scheme.

Vans and the wider package

Other concessions voted through include cutting van CO2 by 35% in 2030, against 40% in the original proposal and 50% under existing rules. The 2035 van target would fall from 100% to 80%.

The changes sit inside a wider package aimed at strengthening automotive manufacturing in Europe as it faces cheaper electrified models from more agile Chinese competitors. That package includes accelerating an EU-made battery value chain and reducing legislative burdens.

Industry reaction

ACEA, the body representing car makers, gave the vote a cautious welcome and acknowledged the "pragmatic" approach and extra flexibility. It said more was needed, arguing that for passenger cars the measures remain "too limited in scope and duration to adequately address the industry's concerns". Toyota called it a "welcome step" while also asking for more flexibility.

European car makers have been lobbying for more post-2035 combustion sales because batteries remain costly to bring down, and ICE models are more profitable, even as EV sales have soared across Europe this year on higher petrol and diesel prices.

The softer targets change the maths for buyers: combustion and extended-range models stay viable in showrooms for longer, while the super-credit structure rewards makers who build small or highly efficient EVs inside the EU. Whether the UK's production base is folded into that structure is still being negotiated.