News about BYD’s entry into South Korea has drawn attention to changes in the share of the South Korean electric vehicle market dominated by Hyundai Motor. BYD is a Chinese electric vehicle maker. Experts predict that BYD’s price competitiveness will play a big role in determining its success in the Korean market.
According to industry sources, BYD plans to launch electric passenger cars in South Korea by this summer. The launch model will be a passenger sedan, which is reportedly undergoing performance certification evaluations by Korea Environment Corporation under the Ministry of Environment. The evaluations are a step on the way to receiving the Korean government’s subsidies for electric passenger cars. BYD’s models that are highly likely to be eligible for subsidies are the midsize sedan Seal, the compact sports utility vehicle (SUV) Dolphin, and the midsize SUV Atto.
“BYD entered Japan before the Korean market, so the Chinese automaker has been monitoring whether their passenger models can work in Asian markets outside of its home market of China,” said Kim Pil-soo, an automotive professor at Daelim University. “In Korea, BYD is likely to focus on selling low-cost, high-quality models, mainly the Atto 3, the Dolphin and the Atto 2.”
BYD’s Seal will likely compete with Hyundai’s more expensive EV lineup, including the IONIQ 6, in terms of price and range, so Korean consumers are expected to value Hyundai’s brand over Chinese electric vehicles. This explains why market experts think that BYD will launch the Atto and the Dolphin, which are more affordable and do not have competing Hyundai models.
Experts believe that the lower starting price of BYD’s lineup will give it an advantage in the Korean market.
“If BYD supplies electric cars to the Korean market at appropriate prices, they will become marketable in Korea,” said Lee Ho-keun, a professor at Daedeok University’s automotive department. If their prices are in the high 20 million won or low 30 million won range, they will be able to have strong competitiveness in terms of purchase prices along with subsidies from the Korean government.”
Subsidies for electric vehicles loaded with lithium iron phosphate (LFP) batteries have been reduced this year due to a reorganization of subsidies by the Korean Ministry of Environment, but the impact is expected to be small if Chinese electric vehicles powered by LFP batteries are priced absolutely very low. This is because they are already more than 5 million won cheaper (excluding subsidies) than comparable Korean electric vehicles such as Hyundai’s Kona Electric and IONIQ 5 and Kia’s Niro EV and EV6.
In addition, BYD’s one-ton electric truck, the T4K, is also expected to have an impact on the Korean market. The T4K received the same 12 million won electric vehicle subsidy as Korean one-ton electric trucks in 2023. But the base vehicle selling price was about 3 million won higher. The relatively high price resulted in poor sales of the Chinese electric truck, so BYD will have no choice but to ponder its pricing policies more in Korea.
Korean consumers are quite picky about imported cars. BYD’s entry into South Korea is particularly disadvantageous given the brand’s image as Chinese. But BYD is constantly monitoring its entry into the Korean market because the Korean market is a kind of barometer for the automobile market as a whole.
As a foreign brand, BYD will face an infrastructure challenge. “In the past, Chinese internal combustion engine-powered car brands entered and subsequently withdrew from Korea because they were unable to solve customer service issues such as service centers and after-sales service networks, and fundamental issues such as a lack of electric vehicle chargers,” Lee said. “I think the success of BYD will depend on a service network plan and guidelines which it will apply such as warranty guidelines to reduce damage to customers.”
In Japan, BYD has been actively communicating with consumers by increasing the number of direct contact points. The carmaker has been employing a strategy to increase brand power by directly tapping into a base of customers ready to buy. As of January this year, BYD had 17 sales and service networks across Japan, according to BYD Auto Japan. It is running an e-mobility partner program that allows customers to test drive the Atto 3 for free for one month in Japan.
“The Korean market is also an important basis for judging overseas success in addition to the Japanese market which is said to be the graveyard for imported cars, so BYD seems to be taking a cautious approach,” said an industry insider.