Hyundai Motor Co. and Kia Corp. plan to slash the prices of some electric vehicles as the South Korean government expanded subsidies in a bid to boost flagging demand for clean cars.
Hyundai will cut the cost of the Ioniq 5, Ioniq 6 and Kona EV, while Kia will do the same for the EV6, Niro EV and Niro Plus, the companies said in separate statements. The discounts, which go into effect next month, will run through the end of 2023 to take advantage of the government’s temporary subsidy expansion, they said.
Demand for EVs, which are generally more expensive than gas-powered vehicles, slowed in South Korea this year amid sagging economic growth, said Lee Hang-Koo, head of Jeonbuk Institute of Automotive Convergence Technology. The latest cuts may intensify the burgeoning price war in the country’s auto market, which is dominated by Hyundai and Kia.
“A price war will intensify next year in Korea as foreign carmakers may release new models,” Lee said. “US or European brands made in China could draw popularity.”
Tesla Inc. started the competition when it began selling its made-in-China Model Y SUV for $44,000 in July. KG Mobility Co., the automaker formerly known as Ssangyong Motor Co. before it went bankrupt, introduced an electric SUV this month for $30,000 through a partnership with China’s BYD Co.
The cuts could also add to global tension over the price of EVs. The program will make some cars as much as one-third cheaper in South Korea than in other countries. For example, Hyundai’s Ioniq 5 will sell for 46 million won ($34,100), a discount of 8%, or 4 million won, from its original price. Residents of Seoul will be able to get it for even less — about 40 million won — when local subsidies are included.
The same car starts at 43,445 pounds ($53,000) in the UK and $41,450 in the US, without taking subsidies into account, according to company websites in each country.
The number of EVs sold in Korea during the first eight months of the year fell to 67,654 from 71,744 a year earlier, the Ministry of Environment said, citing the decline as a reason for the subsidy hike. The Seoul city government budgeted for subsidies for 13,688 EVs this year, but has covered just 5,522 vehicles so far, official data show.