The major blaze that occurred in an apartment complex in the city of Incheon in August, which started in a parked Mercedes-Benz EQE battery electric vehicle (BEV), highlighted the multiple challenges facing South Korea’s battery electric vehicle (BEV) industry. The fire, which destroyed over 100 adjoining vehicles and injured some 23 people, further dampened the already weak consumer sentiment in this segment of the market.
BEV battery safety has become a major concern among new vehicle buyers in major markets around the world, not only in South Korea, along with high costs relative to equivalent internal combustion engine (ICE) vehicles, uncertainty over battery technologies, recharging and rapid depreciation. Rapidly advancing technologies means that better performing models are continually coming onto the market – further undermining the value of existing models.
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South Korea’s leading vehicle manufacturer, Hyundai Motor Group (HMG) – comprising both Hyundai Motor and Kia Corporation – last month responded to some of these safety concerns by announcing a decision to install battery management systems (BMS), which monitor battery performance and help anticipate problems, in all BEV models from this year. The automaker is also working with leading battery suppliers such as South Korea’s LG Energy Solution (LGES) to help improve current BMS systems.
Passenger vehicle demand globally has shifted significantly in favour of hybrid vehicles this year, significantly outperforming BEVs in key markets around the world including China, US, Europe and also South Korea. Hyundai and Kia have also enjoyed a strong surge in demand for their hybrid models this year, inevitably at the expense of BEVs and also ICE vehicles.
BEVs remain a very small part of HMG’s global business, with sales estimated at just over 163,000 units in the first half of 2024 – equivalent to just over 4% of global volumes. Hyundai Motor’s global BEV sales fell sharply in the first half of 2024, by around 30% to just over 102,000 units – or less than 5% of its global sales. Kia’s BEV sales fared slightly better, with volumes rising by 8% to just over 61,000 units – but still accounted for only 4% of its global sales.
BEV demand in South Korea have been particularly weak this year, with combined Hyundai and Kia volumes estimated at 36,000 units – equivalent to just over 4% of the around 800,000 vehicles sold in the country in this period. Sales of imported BEVs, on the other hand, are estimated to have more than doubled to around 20,000 units to account for 16% of total imports, led by brands such as BMW, Mercedes-Benz and Tesla.
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By GlobalDataHMG performed more strongly in the US BEV market this year, where first-half sales rose by 61% to 61,840 units according to industry data. Sales of Hyundai and Genesis models surged by 52% to 32,590 units while Kia’s BEV sales more than doubled to 29,250 units – to claim a 10% share of the US BEV market combined. The group is scheduled to begin deliveries of EVs from its newly-built assembly plant in Savannah in the US state of Georgia in the fourth quarter of this year, which is expected to further strengthen its position in the local BEV market.
In Europe Hyundai Motor sold almost 28,000 passenger BEVs in the first half of 2020, while Kia is estimated to have sold around 30,000 units.
HMG expects a sharp rebound in domestic BEV sales starting in the second half of 2024
HMG expects a sharp rebound in domestic BEV sales starting in the second half of 2024, driven by the launch of more affordable models such as the Hyundai Casper/Inster A-segment BEV and Ioniq 3, as well as the Ioniq 7. Kia began deliveries of its EV3 compact SUV in July and plans to launch the EV4 later this year, while it continues the global roll-out of its Chinese made-EV5.
HMG’s new model activity will continue to intensify in the second half of the decade, including the launch of extended range EVs (EREVs), while lower-cost batteries including low-nickel batteries such as lithium iron phosphate (LFP) and all solid state batteries (ASSBs) will also be more widely used. The group is still targeting annual sales of around 3.6 million BEVs globally by 2030, equivalent to more than one-third of its total forecast annual sales of 10 million units, which would require a major leap from current levels.
