BYD to send jolt to Korean EV market with entry next year

BYD confirmed it will make its debut in the Korean passenger EV market early next year, posing a threat to Hyundai and Kia EV sales that are already withering with the presence of Tesla.

BYD's Atto 3 compact SUV is on display at the Jeddah International Motor Show in Jeddah, Saudi Arabia on Oct. 29. [SARAH CHEA]

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Chinese EV titan BYD confirmed the official debut of its passenger EVs in Korea early next year, posing a formidable threat to local manufacturers that are already suffering from descending sales with the rising popularity of Tesla and disappointing overall EV demand.

The Shenzhen-based EV maker's entry, likely with the Atto 3 compact SUV leading the charge, will inevitably hasten the price war and challenge Korean companies like Hyundai Motor and Kia, which are narrowly defending sales with the recent launches of similarly sized EVs, the Capser and the EV3.

BYD Korea on Wednesday announced that it is "set to launch EV models in Korea in early 2025" and is currently "in the last phase of preparations, such as obtaining government certifications and building a sales network across the nation."

"BYD is in full swing for preparations for its Korean debut, combining our success in global markets and technical capabilities," said Cho In-chul, managing director of the passenger vehicle business at BYD Korea.

It's the first time BYD confirmed its debut in the local passenger vehicle market amid a series of speculating reports since last year. The company entered Korea in 2016, but only with commercial vehicles like electric buses and trucks.

The Korean division is set to open its first showroom in Deungchon-dong in western Seoul’s Gangseo District. Local distributors are China Harmony Auto Holding, Deutsch Motors and Samchully Motors.

The interior of BYD's Atto 3 compact SUV [SARAH CHEA]

An EV juggernaut armed with a light price tag The Atto 3 is speculated to be the first model to launch in Korea, while the Chinese brand already registered trademarks for six models in the local market, including the Dolphin and Seagull hatchbacks.

"The Atto 3, Seal sedan and Dolphin are currently in the process of obtaining government certifications," a spokesperson for BYD Korea told the Korea JoongAng Daily.

The price will be the key to determining success, and it is probably what BYD is most confident about. The sticker price of an Atto 3 is around 119,800 yuan ($17,000) in China, while the Seal sedan starts at 179,800 yuan.

The Atto 3's unique grip-style door handle [SARAH CHEA]

The Korean price will reportedly fall somewhere below 30 million won ($21,000) after applying the government's EV subsidies — cheaper than the local rivals, Hyundai's Kona EV and Kia's EV3.

"From first starting out as a battery developer, BYD has an integrated value chain where it can source its own materials for EVs, the easiest method to gain price competitiveness," said Hanyang University business professor Choi Seong-jin.

"In the case of the Seal sedan, the profit margin stood at around 16 percent, even more profitable than the Shanghai-made Tesla Model 3 at 14 percent," Choi added.

The Atto 3, as BYD's EV targeting the foreign market, can run 420 kilometers (261 miles) on a single charge, according to Europe's WLTP standards. Under Korea's standards, the range is expected to be somewhere in the mid-300-kilometer range.

The EV brand sold a total of 100,020 Atto 3s last year only in foreign markets, around half of the carmaker's total overseas sales.

Hyundai and Kia are already losing ground in the Korean EV market to Tesla, which has been bringing in Shanghai-made EVs topped with Chinese batteries at sharply cut prices.

Tesla sold a total of 17,380 EVs in Korea in the first half of the year, beating Kia's 16,537 units and Hyundai's 16,056 units. By model, Tesla's Model Y was the best-selling EV during the period, proving to be more popular than Hyundai's Ioniq 5 and Kia's Ray and EV6.

A production line of BYD in Changsha, central China's Hunan Province, on Oct. 10. [XINHUA/YONHAP]

Brand awareness is still a thing Still, brand awareness will be the biggest hurdle for the EV giant to settle well in Korea, as local consumers tend to shun "made-in-China" products due to the perception that they are cheap because they are low quality.

Only one out of 10 people in Korea said they are considering Chinese EV brands as an option in a recent survey conducted by auto-specialized research firm ConsumerInsight of 525 drivers who have plans to buy a new car in the next two years.

Two out of five respondents said they "will never purchase Chinese EVs no matter how cheap they are."

"BYD lacks clear and solid brand awareness as an EV maker, which can work as a negative factor for global consumers who value brand awareness just as they value capability and technological prowess," said Lee Ho-joong, a researcher at the Korea Automotive Technology Institute.

"BYD's EV sales in Europe fall short of SAIC Motor, which is considered to have more heritage as an auto brand, and this proves BYD's limitation."

However, BYD was the No. 1 Chinese brand that Koreans think is "worth considering" if they are on sale in the local market. Of all Chinese brands, about 13 percent selected BYD in the survey, far ahead of second-place SAIC Motor with 7 percent followed by Geely Automobile at 6 percent.

Some 24 percent picked BYD as the brand that poses the biggest threat to Korean-made EVs.

The Chinese carmaker reported third quarter sales that surpassed Tesla's for the first time at around 201.1 billion yuan, up 24 percent from a year ago.

BY SARAH CHEA [chea.sarah@joongang.co.kr]