Decreasing Subsidies
Sales of Hyundai and Kia’s electric vehicles (EVs) in South Korea are steadily declining. This drop is attributed to decreasing subsidies, rising charging costs, and intensified competition as imported car brands aggressively penetrate the domestic EV market.
According to Hyundai Motor Group on Sept. 4, last month’s EV sales for Hyundai decreased by 30% to 3,476 units compared to the same month the previous year. Considering Hyundai’s total domestic sales increased by 12.9% last month, the decline in EV sales is even more pronounced.
Sales of Hyundai’s flagship EV model, the Ioniq 5, plummeted by 46.9% year-on-year to 1,061 units last month. Ioniq 6 sales were down 18% to 400 units compared to July, and the Porter electric model recorded a 35% year-on-year decline with sales of 1,371 units.
Genesis, Hyundai’s luxury brand, experienced an even sharper decline. The electric sedan model, Genesis G80 Electrified, sold only 68 units last month, a staggering 74% decrease from the same month last year. Electric SUV models, GV60 and GV70, registered sales of 127 and 94 units, respectively, indicating a decline of 51.2% and 71.6% year-on-year.
Kia also witnessed a significant dip in sales for its large electric SUV model, EV9, from 1,251 units in July to 408 units last month, a nearly two-thirds reduction. The EV6 sold 948 units, while the Niro EV and Bongo EV recorded sales of 507 and 610 units respectively.
The decline in Hyundai and Kia’s EV sales is primarily attributed to reduced EV subsidies and increased charging fees, reducing the cost-effectiveness of owning an EV. The Ministry of Environment decided to cut this year’s EV subsidy by 1 million won to 5 million won from the previous year and plans a further reduction of 1 million won next year. Meanwhile, public EV rapid charging fees have increased by 30-40 won per kWh since last September and are expected to rise further.
Consequently, many consumers are now opting for hybrid cars. These vehicles, combining internal combustion engines and electric motors, emit fewer exhaust gases, eliminate the need for charging, and boast impressive fuel efficiency. Hyundai’s hybrid car sales surged 153.4% year-on-year last month, driven by the sale of 5,328 units of the Grandeur hybrid model. Kia’s most sold eco-friendly model last month was the Sorento hybrid with 4,683 units.
Indeed, Hyundai’s hybrid car sales surged by 153.4% compared to the same month last year. The Grandeur hybrid model alone sold 5,328 units last month, driving the overall increase in sales. Among Kia’s eco-friendly models, the Sorento hybrid was the best-selling last month with 4,683 units sold.
On the other hand, the increased sales of imported EV brands pose a threat to Hyundai and Kia. According to the Korea Imported Car Association, while only 2,369 imported EVs (excluding Tesla) were sold in South Korea in 2019, this number soared nearly tenfold to 23,202 units last year. The figure has already surpassed 12,000 units as of July this year.
Imported car brands are also currently offering significant discounts for their EV models. The 2023 model of Mercedes-Benz’s EQE offers a discount of between 13 million and 15 million won depending on the model. Similarly, the 2024 model of BMW’s i4 mid-sized electric sedan provides a discount ranging from 8 million to 14 million won.