Lexus drew market attention with the price tag on its All-New ES sedan, launched on the 13th. The model marked the first time the ES line has included an electric version, and Lexus set the base electric model 1.3 million won lower than the hybrid. Electric cars normally carry higher prices than hybrids because they are fitted with far larger batteries. Yet Lexus, which priced its electric and hybrid versions the same in Japan, cut the electric price in South Korea — a sign of how determined it is to win share in the local market.
Lexus is pricing aggressively because it knows how widely price competitiveness is seen as decisive in Korea's electric vehicle market. Imported cars have been selling briskly this year. Imports accounted for more than 20% of newly registered vehicles last year for the first time, and their share climbed to 24.5% in the January-August period this year. That means one in every four cars was built overseas.
Tesla, led by the Chinese-made Model Y, sold 12,372 units in September alone for a 35.5% share. BYD, China's leading electric vehicle brand, sold 2,614 units for a 7.5% share. Together the two companies hold 43% of the imported passenger car market, and more than 80% when the scope narrows to electric vehicles.
Hyundai Motor (005380.KS), by contrast, saw its electric vehicle sales fall 27.7% to 5,435 units. Kia (000270.KS) sold 7,941 electric vehicles, up 12.6%, but that growth trailed Tesla's 36.4% and BYD's 156.3%.
Automakers argue that fending off the low-price offensive from China requires a shield, much as Europe recently capped Chinese hybrid vehicle exports. They want rules to block dumping that eats away at the market, along with measures such as tax incentives for domestic production that could restore cost competitiveness.
The industry is right that a shield is needed. At the same time, domestic automakers urgently need to rebuild their own competitiveness. Hyundai Motor Group has made hydrogen and robotics its new growth businesses and is pushing hard on both. But if the automaker keeps moving against market currents — as seen in the controversy over Avante pricing and the union's strike — and erodes the competitiveness of its car business, the new ventures will lose their momentum as well.