Hyundai to spend $450 million expanding Alabama plant for hybrid and EREV engines

Hyundai will build hybrid and EREV engines in Alabama, relying less on imported engines and electrified components. The project is expected to create 53 full-time positions at a plant that already employs about 4,200 people, though it is unclear whether all are net new hires.

The announcement

HMMA announced the project at the Montgomery plant on 28 October 2026. Governor Kay Ivey, Alabama Commerce Secretary Ellen McNair and South Korean Ambassador Kyung-wha Kang were present. The money covers expanded engine production for hybrid and extended-range electric vehicle powertrains. It also pays for equipment and tooling upgrades for the two SUVs.

"These investments strengthen our manufacturing capabilities, support future vehicle production, and ensure HMMA remains a cornerstone of Hyundai's North American manufacturing operations for years to come," said Mark Rader, president and CEO of HMMA.

Why local engine capacity matters

Montgomery already builds the Tucson, Santa Fe, Santa Fe Hybrid and Santa Cruz. HMMA says the site can build up to 399,500 vehicles a year at full production. Hyundai says the investment is meant to help the factory handle additional product and powertrain requirements rather than raise that figure. Hyundai says the investment gives the factory more flexibility to adjust production as customer preferences shift between combustion, hybrid and electric.

An EREV uses an electric motor to drive the wheels and a combustion engine as a generator to extend range. That is why engine capacity sits at the centre of an electrification plan.

Hyundai plans to localize production of the Tucson hybrid in Alabama. The company said the move is meant to reduce tariff exposure and respond more flexibly to North American demand. Hyundai suppliers already operate in Coffee, Covington and Barbour counties. The announcement named no new supplier contracts or Wiregrass jobs.

The project sits inside Hyundai Motor Group's $26 billion US commitment for 2025 to 2028. The larger pieces include a $5.8 billion steel mill in Louisiana and the $7.6 billion Georgia Metaplant. The Alabama project accounts for about 1.7% of that total.

The money and the jobs

Alabama's official project description lists capital investment of $412,885,541. Hyundai's announcement cited about $450 million. The difference has not been explained.

The roles carry an average hourly wage of $30.03, or about $62,467 a year. Against the state's $412.9 million capital figure, the cost works out to roughly $7.8 million per position.

Cumulative investment in HMMA now stands at nearly $2.2 billion since 2005. The plant and its suppliers generate more than $5 billion in annual economic activity for Alabama. They contribute about $100 million in state tax revenue and more than $12 million in local tax revenue each year.

Production plans and market context

Production of the all-new Tucson is due to start at Montgomery before the end of 2026. The refreshed Santa Fe follows. The Santa Fe EREV is slated for launch in the first half of 2027. Hyundai says it is developing that version to cover more than 600 miles on a single charge and fill-up. It combines an engine with electric motors. Hyundai also plans to build the all-new Tucson as a hybrid in Alabama.

Demand gives the plan some backing. Hyundai Motor America reported its best third quarter in the US at 246,896 units. Tucson sales rose 32% and Santa Fe sales 21% from a year earlier.

What happens next

Hyundai has not named a general contractor, published floor-area specifications or given a construction start date. The state has announced no incentive amount.