New models drive August EV sales in South Korea, but demand slump may follow

Domestic electric vehicle sales by South Korean automakers reached 11,280 units last month, a 90% increase from August 2023′s 5,949 units and a 9% rise from July. However, many believe this growth is primarily due to new vehicle releases in July and August. The August sales figures also reflect the impact of a fire involving a Mercedes-Benz EV in an underground parking lot in Cheongna on Aug. 1. Excluding the sales of Kia’s EV3, launched in July, and Hyundai’s Casper Electric, released in August, the decline in EV demand becomes more apparent.

As EV demand cools this year and “EV phobia” spreads due to the Cheongna fire, concerns are growing about a potential contraction in South Korea’s auto market in the second half of the year.

Firefighters practice extinguishing an electric vehicle fire during a drill at Maeheon Citizen's Forest parking lot in Seocho-gu, Seoul, on Sept. 2, 2024./News1

The best-selling domestic EVs in South Korea last month were the newly released Kia EV3, with 4,002 units, and the Casper Electric, with 1,439 units. Together, these models accounted for about 48% of all domestic EV sales in August. Without these new models, EV sales would have dropped by approximately 30% compared to July, contrasting with the 4% decrease in overall domestic vehicle sales by the five major automakers in August, which totaled 105,504 units.

Most other EVs performed poorly. Sales of Hyundai’s flagship EV, the Ioniq 5, which underwent a facelift in March, fell to 1,222 units in August, a 31% drop from the previous month. Sales of the Kona Electric, which sold 508 units in July, halved to 263 units in August. Similarly, Kia’s main EV, the EV6, saw a 55% decrease, with sales falling to 599 units in August from 1,344 units in July. KG Mobility’s EV, the Torres EVX, also saw a significant decline, with sales dropping by 52% to 377 units in August from the 600 to 700 units sold monthly earlier in the year.

“The new vehicle effect seen in August likely reflects pre-contracted volumes before the Cheongna fire incident and sales to corporate fleets and rental companies. As this effect fades in September, the EV demand slump could become more pronounced,” an industry insider said. The industry is particularly concerned as the third and fourth quarters are typically the most active periods due to new model releases and increased discount sales ahead of year-end. The Cheongna fire in August could negatively impact sales in the second half of the year, worsening these concerns.

Sales data from January to August this year also indicate a significant slowdown in EV demand in South Korea. Hyundai, the market leader, saw its EV sales from January to August drop about 45% compared to the same period last year, totaling around 26,000 units. As a result, more domestic and foreign automakers are considering increasing EV purchase incentives.

For example, Hyundai introduced a product last month in collaboration with Hyundai Capital that offers discounts on leases based on the value of the EV battery—the first of its kind in South Korea. The plan, which factors in the retrieval of the battery when scrapping the Casper Electric after 10 years, allows customers to lease the car for 273,000 won per month for five years, making it about 14,000 won cheaper than leasing a comparable gasoline car.

The South Korean auto industry is also closely watching the government’s EV safety management measures, expected to be announced early this month. Public anxiety surrounding EVs has grown, as comprehensive measures have yet to be released more than a month after the Cheongna fire incident.

The industry believes addressing these concerns quickly is crucial to revitalizing the market. “Since the Cheongna fire, various government departments and local governments have been hastily introducing related policies, which has only added to the confusion surrounding EVs. This needs to be rectified,” an industry insider said.