An Investor Who Sees The Future

Suseo-dong Eunsung Motors Headquarters.

A meeting of the executive board was convened under the chairmanship of Vice Chairman Han Chan-young. Presidents of various subsidiaries, corporate heads, key department executives, and development teams from the research institute gathered in one place.

The expressions of those seated were all somber. This was due to Eunsung Motors’ current unfavorable situation.

Last year, not only in the U.S. but also in the global market, sales volumes began to decline for the first time. Fortunately, strong domestic performance meant that revenue and operating profit did not drop; however, the halt in growth was critical for the company.

The problem is that the drop in sales is likely not just temporary but could become a trend.

Han Chan-young stood up and spoke.

“As you know, the end of internal combustion vehicles is now only a matter of time.”

European countries have already begun to cut sales of internal combustion vehicles since 2020, with plans to completely ban the sale of gasoline and diesel cars as early as 2030.

Change was an anticipated trend. For this reason, most car manufacturers had been investing the profits from internal combustion vehicles into the development of future vehicles for a long time.

Eunsung Motors was no exception. Unfortunately, they missed a crucial opportunity at the most important time.

Those gathered for the meeting were likely thinking the same thing.

“If it hadn’t been for hydrogen cars…”

Initially, the development direction for next-generation vehicles was split between two paths: electric vehicles and hydrogen vehicles.

At the beginning, electric vehicles seemed to have many issues. While performance could improve over time, the short driving range and long charging times appeared to be insurmountable problems.

The cost of batteries was also an issue. Prices had not reached a level that could replace internal combustion vehicles due to battery costs.

Hydrogen vehicles faced similar high costs, but it was believed that these could be adequately overcome through technological development and mass production.

Hydrogen vehicles do not have range issues, and since refueling involves simply injecting hydrogen into storage tanks, the charging speed is not significantly different from that of internal combustion vehicles.

Eunsung Motors was convinced that hydrogen vehicles were the ultimate future vehicle. Therefore, they generously invested their group capabilities into hydrogen vehicle research and development ahead of others.

As a result, they launched the world’s first mass-produced hydrogen vehicle, the PotenHY. The price was 150 million won, five times that of a comparable internal combustion vehicle.

At this point, no matter how much subsidies are provided, price competitiveness is lacking. Moreover, there is an absurd shortage of hydrogen charging stations.

Ultimately, PotenHY was only purchased for trial use by public institutions and research labs. The sales volume became negligible to the point where counting them was meaningless.

Not only did they fail to generate profits, but they also struggled to recover even the invested development costs.

However, this marked the beginning for hydrogen vehicles. From here on, all companies would enter the hydrogen vehicle market, and as the number of hydrogen vehicles increased, the shortage of charging stations would naturally be resolved.

Toyota released the Mirai with the support of the Japanese government, and Honda, Audi, and BMW also began developing their own models.

Up to this point, the future of hydrogen vehicles appeared bright, and Eunsung Motors was convinced it would become a leader in the next-generation automotive industry.

But an unexpected situation arose.

Electric vehicles, which could be considered competitors, rapidly advanced and improved various issues.

Their range increased, charging speed improved, and performance became comparable to internal combustion engine vehicles. The most decisive factor was the drop in battery prices.

In recent years, the price of battery packs for electric vehicles has decreased by over 70%. This allowed electric vehicles to gain price competitiveness.

Unlike hydrogen vehicles, which had zero private demand, electric vehicles sold like hotcakes. At the forefront was Nikola.

As electric vehicles won decisively, companies that had been researching hydrogen vehicles quickly pivoted toward electric vehicles.

Now, Eunsung Motors was essentially left standing alone in the hydrogen vehicle camp.

Realizing the severity of the situation, Eunsung Motors belatedly began research and development on electric vehicles. However, it was already significantly lagging behind frontrunners like Nikola and BID in terms of technology.

Fortunately, Eunsung Motors had the technical expertise, production capacity, and sufficient capital accumulated as a complete vehicle manufacturer.

Therefore, it quickly launched two types of electric vehicles to gauge market reaction. If they had secured Seosung SB, they would have moved forward with mass production of electric vehicles.

However, Im Jin-yong retained Seosung SB and partnered with Carros.

From Eunsung Motors’ perspective, it was a situation that required reworking its future vehicle strategy.

Han Chan-young looked around at the executives and said, “From now on, Eunsung Motors will focus its investment on hydrogen vehicles.”

The conference room buzzed with excitement at those words.

After one failure, to pull out the card of hydrogen car development now was quite surprising.

“After all, electric vehicles are merely a transitional product that emerged on the road to next-generation automobiles.”

No matter how much they’ve improved, range and charging time remain issues. As long as these fundamental problems are not solved, hydrogen vehicles have every opportunity.

Therefore, other automakers turning to electric vehicles have not completely halted their technology development for hydrogen cars. (There are many overlapping aspects since both rely on electricity to power motors.)

Kang Min-cheol, the CEO of Eunsung MBS, spoke cautiously.

“It’s true that hydrogen cars are superior to electric vehicles in many ways, but currently, the charging infrastructure is severely lacking.”

There are only 12 hydrogen charging stations in South Korea.

How can one drive a car that cannot charge its fuel?

“You don’t need to worry about that. The government plans to designate hydrogen cars as a future growth engine and actively support them soon. This includes increasing subsidies for hydrogen cars, building hydrogen charging stations directly, and providing installation support funds to the private sector.”

Since Eunsung Motors began developing electric vehicles, the government has actively supported them. To be precise, subsidies have been focused on Eunsung Motors by imposing limits on vehicle prices and battery capacity.

But now, are they going to support hydrogen cars again?

Everyone gathered here knew about the relationship between Eunsung Motors and the government.

Regardless of whether it’s electric or hydrogen vehicles, sales are impossible without subsidies. If the government backs it properly, it’s worth a shot.

Han Chan-young smiled.

“Hydrogen cars are the ultimate eco-friendly vehicles. The future lies with hydrogen cars.”

***

We started investigating PAS.

In Korea, it’s obvious that we would notice any movements. So, we discreetly commissioned the Golden Gate Asia branch.

First, we plan to closely examine the flow of funds.

To prepare for any unforeseen situations, we strengthened security around the building and homes. We also kept a close eye on the movements within the political arena and Eunsung Motors.

I received a call from Chairman Im Jin-yong.

[The government is set to promote hydrogen cars. Soon, the President will announce a support plan for hydrogen vehicles.]

This surprised me.

Could they really take out the hydrogen car card?

In Korea, there was only one company capable of launching hydrogen cars.

“This clearly indicates support for Eunsung Motors.”

After failing to absorb Seosung SB as a subsidiary and falling behind in electric vehicle R&D, were they thinking about gaining the upper hand with hydrogen cars?

[Eunsung Motors is recognized for its technological prowess in hydrogen cars, even surpassing Toyota and Honda. Moreover, as the only complete vehicle manufacturer with a mass production system, they likely found it hard to ignore.]

When it comes to politicians, one must understand the context well.

Budgets don’t just appear out of nowhere; they are limited by purpose and usage.

Increasing subsidies for hydrogen cars and expanding hydrogen charging stations essentially means decreasing subsidies for electric vehicles and electric charging stations.

“Thank you for the heads-up.”

[Then I’ll take my leave.]

After hanging up, I pondered.

Unlike the fledgling OTK Company, the Seosung Group has deeply rooted itself in Korean society for a long time. They must have quite a few people planted within the political sphere. That’s how they could gather this information in advance.

It’s convenient to befriend the Seosung Group.

A few days later.

As Chairman Im Jin-yong mentioned, President Park Si-hyeong took the stage at an economic policy meeting, declaring renewable energy, robotics, content, the Internet of Things, big data, and hydrogen cars as future growth engines.

The focus was heavily on hydrogen vehicles, with a step-by-step roadmap presented.

[Hydrogen cars, dubbed the ultimate eco-friendly vehicle!]

[Local governments are directly installing hydrogen charging stations!]

[Plans to triple the number of hydrogen charging stations by the end of this year]

[Expansion of hydrogen vehicle subsidies]

Amid the influx of news, Eunsung Motors announced its plans to launch two types of hydrogen vehicles, seemingly waiting for the right moment.

Taek-gyu asked, “Are hydrogen cars run by hydrogen?”

“That’s right.”

There are two types of hydrogen vehicles: hydrogen internal combustion engine vehicles that use hydrogen to power the engine and hydrogen fuel cell vehicles (FCEVs) that generate electricity from hydrogen to drive the motor.

In reality, the former has seen little development, so when people refer to hydrogen cars, they typically mean the latter.

“Isn’t that basically the same as electric cars?”

“The difference is between a secondary battery and a fuel cell.”

Electric vehicles (EVs) store electricity in a battery, while hydrogen vehicles (FCEVs) produce electricity directly by reacting hydrogen with oxygen.

One carries a charged battery, while the other carries a mini power generator.

“What about the price?”

“Hydrogen vehicles are much more expensive.”

Instead of a battery, hydrogen vehicles are equipped with hydrogen fuel tanks and fuel cell stacks (the devices that generate electricity). Currently, the price of the fuel cell stack is higher than that of batteries.

“Is that why they failed?”

“That’s part of it, but the biggest issue was the lack of charging stations.”

Initially, the infrastructure for electric vehicle charging was similarly lacking. However, electricity can be installed more easily; you just need to run wires and set up a charger.

If needed, charging from a household outlet is also an option.

“The electric vehicle charging stations have been set up everywhere — at highway rest areas, government offices, apartments, large buildings, and supermarket or shopping mall parking lots — but there are only 12 hydrogen charging stations.”

“They can just build more.”

“It’s ridiculously expensive.”

“How much?”

“At least 3 billion won.”

Taek-gyu was taken aback.

“Is it really that much?”

“This is just the pure installation cost; the land price is separate. To build one in Seoul, you’d need at least 5 billion won.”

Regardless of the cost, if there are enough users, it’s worth the investment. But how many hydrogen cars are there to justify such investment?

“It’s a chicken-and-egg problem.”

There are no hydrogen cars because there are no hydrogen charging stations, and there are no hydrogen charging stations because there are no hydrogen cars. That’s why the government plans to subsidize the construction of charging stations first, then increase the number of hydrogen cars.

In fact, looking solely at South Korea, the hydrogen vehicle promotion policy isn’t entirely misguided. South Korea’s land is small, and its population density is among the highest in the world. Furthermore, 40 percent of the population resides in the metropolitan area.

Just setting up a few charging stations in the metropolitan center and local municipalities would resolve some issues.

“Eunsung Motors hasn’t made a mistake; it’s just that there’s no one behind them in line.”

In new industries, economies of scale are crucial.

Both electric and hydrogen vehicles have their issues. If lithium-ion battery prices hadn’t dropped significantly, hydrogen cars might have gained a competitive edge in pricing.

Then, multiple companies would have entered research, development, and mass production of hydrogen vehicles, creating a virtuous cycle of lowering costs and expanding charging infrastructure.

“Isn’t the trend already leaning toward electric vehicles?”

“That’s true, but…”

Now, support from the government is likely to leave hydrogen cars limited to the domestic market.

However, shortly after, surprising news emerged.

Toyota, Audi, BMW, and others have formed patent partnerships with Eunsung Motors and simultaneously announced their plans for hydrogen vehicle development.