Hyundai Motor Co and Kia Corp have announced plans to reduce the prices of several electric vehicles (EVs) in South Korea. This decision comes as the South Korean government seeks to stimulate interest and demand for clean vehicles by expanding subsidies. The price cuts will apply to models such as the Hyundai Ioniq 5, Ioniq 6, and Kona EV, as well as the Kia EV6, Niro EV, and Niro Plus. The reductions are expected to take effect next month and continue until the end of 2023.
The decline in EV sales in South Korea this year can be attributed to stagnating economic growth. As a result, the increased price competition in the automotive industry, with Hyundai and Kia as key players, may further intensify. Lee Hang-Koo, the leader of the Jeonbuk Institute of Automotive Convergence Technology, suggests that the competition could become more heated next year, especially if foreign automakers introduce new models to the Korean market. Cars from American and European brands, including those manufactured in China, could become popular choices among consumers.
It is worth noting that the proposed price reductions may create tension in the international EV market. With the combination of subsidies and lower prices, EVs could be up to one-third cheaper in South Korea compared to other countries. However, despite the availability of subsidies for 13,688 EVs this year, only 5,522 vehicles have taken advantage of the benefits thus far, according to the Seoul city government.
Sources: Bloomberg, Ministry of Environment, government of South Korea