BYD, China's largest electric-vehicle brand, sold 20,137 units in South Korea in the first nine months of this year, 3.3 times its total for all of last year of 6,107 units. Its share of the imported-car market jumped to 7.2% from 2.0%. BYD now ranks fourth among imported brands by sales, behind Tesla at 89,148 units, BMW at 57,929 and Mercedes-Benz at 43,249. The shift came less than two years after the Chinese automaker entered the Korean market.
South Korea's EV market is growing sharply, surpassing last year's full-year sales of 216,405 units in just seven months this year, industry data showed on the 19th. Sales reached 299,894 units through September, up 99.8% from 66,364 units a year earlier. Chinese-made EVs are eating into the market, however, leaving domestic industry with little of the benefit from that growth.
Tesla sits at the center of the trend. All Tesla vehicles sold in Korea are built at the company's Shanghai Gigafactory. The best-selling single EV model in Korea this year is the Tesla Model Y at 73,123 units, more than three times the 22,898 units of the second-ranked Kia EV3.
The Model Y is now close to overtaking the Kia Sorento as the top-selling passenger vehicle in Korea. The Sorento has sold 74,933 units this year, only about 1,800 more than the Model Y. The Model Y beat the Sorento for the monthly passenger-car sales crown in September, after doing so in May. Driven by the Model Y, Tesla has sold 89,148 vehicles this year and commands 31.9% of the imported-car market. A Korea Automobile and Mobility Association survey of the domestic EV market in the first half showed Tesla with a 28.3% share, ahead of Hyundai Motor at 19.6% and second only to Kia at 35.4%.
The industry is in fact more alarmed by BYD than by Tesla. Tesla manufactures in China but remains an American brand, while BYD designs, engineers and builds its vehicles entirely in China. When BYD entered Korea, resistance to Chinese cars was expected to slow its expansion, but the company is gaining ground quickly on value for money.
BYD has outsold each of Korea's three midsize automakers — KG Mobility, Renault Korea and GM Korea — in monthly domestic sales for three straight months. Industry officials increasingly worry that this pattern, in which an imported Chinese brand outsells automakers with manufacturing bases in Korea, is hardening into a new normal for the domestic car market.
BYD sold 2,614 vehicles in Korea in September. Renault Korea sold 2,289, KGM 2,100 and GM Korea 727. The reversal began in July, when BYD's 2,846 units topped KGM at 2,610, Renault Korea at 1,704 and GM Korea at 766. In August, BYD sold 3,002 units against KGM's 2,300, Renault Korea's 2,024 and GM Korea's 731. Third-quarter totals were 8,462 units for BYD, 7,010 for KGM, 6,017 for Renault Korea and 2,224 for GM Korea.
Notably, BYD held its sales even after losing eligibility for government EV purchase subsidies in July. The company has run an aggressive marketing strategy, using its own funds to offset the loss of the subsidies. It also broadened its customer base by pricing its new plug-in hybrid, the Sealion 6 DM-i, at 37.5 million won, the lowest for any PHEV sold in Korea.
Chinese EVs are expected to press further into the Korean market. Zeekr, the premium brand of China's Geely Group, began full-scale sales of the 7X in Korea in October. Xpeng and Chery are also preparing to enter after setting up Korean units.
Lee Jae-kyu, executive vice president in charge of vehicle development 1 at Hyundai Motor and Kia, voiced a sense of crisis in remarks to reporters at an event at the Namyang research center in Hwaseong, Gyeonggi Province. "What I felt looking at Chinese cars when I visited the Paris Motor Show from the 12th to the 18th was despair," Lee said. "The existing European cars were presented with unremarkable design and technology, while the Chinese companies' cars had good design and were about $10,000 cheaper. I thought all the companies in Europe would soon go under."
The United States and Europe are countering China with steep tariffs, including an additional 100% duty and levies of up to 45.3%. Japan offers a production tax credit that reduces corporate taxes for companies that manufacture and sell in the country, including EVs. Korea, by contrast, applies a tariff of just 8% on Chinese passenger cars, and the government excluded EVs from its domestic production tax credit in its August tax reform plan.
Experts call for designing "hidden incentives" and easing rules to strengthen the competitiveness of Korean automakers while avoiding trade friction. "Excluding EVs from the domestic production tax credit is a very big mistake," said Kim Pil-soo, a professor of automotive engineering at Daelim University. "There needs to be across-the-board support for building domestic plants, producing domestic parts and creating jobs."
"If regulation-heavy policy is piled on top of systems that already make it hard to do business, like the yellow envelope law, companies have no reason to operate in Korea," Kim said. "The auto industry is in crisis, and it is time for the government to wake up."