Price hikes and competition could end Tesla era
Korea was no exception.
Since Tesla debuted here in 2017 with its first showroom in southern Seoul, the Palo Alto, California-based carmaker's dominance in Korea's EV market hasn't wavered. Even homegrown brands Hyundai Motor and Kia didn't stand a chance.
That paradigm, however, might change this year.
Legacy and up-and-coming carmakers are making an all-out effort to knock Tesla off its throne, introducing an array of new models ranging from value-for-money to high-end vehicles.
In the meantime, Tesla’s competitiveness is on the verge of losing steam with recent price increases of key models and CEO Elon Musk confirming there will be no new models for the rest of the year.
A recent survey on EV preferences in Korea showed that Tesla has slipped to the third spot with 17 percent, down from second place last year with 31 percent.
Hyundai Motor retained first place this year, followed by newcomer Kia, with 38 percent and 18 percent each.
Tesla's sales in Korea showed a 50 percent year-on-year jump last year, delivering 17,828 units.
Most of the increase derived from its Model Y, which initiated sales here last year.
The Model 3, the most popular entry-level model at Tesla, showed a slump in sales, with 8,898 cars delivered last year, a year-on-year drop of 19.1 percent.
This year, Tesla has delivered 206 units as of February.
While the high price of EVs is still a hurdle for many potential car buyers, Tesla raised sticker prices across its entire lineup in the past couple of weeks, presumably because of the rising price of raw materials, including the nickel used in batteries.
In Korea, Tesla raised the price of its Model 3 Long Range model by 3.5 million won ($2,900), or 5 percent, in early March. The long-range version of the Model 3 sedan, the cheapest model at Tesla, now costs 74.29 million won.
Compared to 2019, the price of the Model 3 Long Range has increased by nearly 20 percent.
The Model Y Long Range price has gone up 3.1 million won and the Model Y Performance price also increased by 4.4 million won.
Such abrupt and unexplained price hikes are unprecedented, especially in Korea's auto scene.
Usually, carmakers in Korea raise prices only after updating models, even if the update is small and the price hike is actually due to other factors. These updated vehicles are then launched as "facelifts," with the automaker using the changes to justify the new price.
Even last year, when the global chip shortage forced Hyundai Motor and Kia to raise some prices, the automakers still released "facelifted" versions of the vehicles.
Hyundai Motor will also release partially revamped versions of its Santa Fe and Avante models this year with increased prices.
But the automakers have no plans to raise EV prices.
"There are no plans to raise the price of Hyundai Motor's Ioniq 5 and Kia's EV6 any time soon," a spokesman for the Korean carmaker said.
The long-range version of the Ioniq 5 still costs 49.8 million won.
"Tesla's status in Korea's EV market has been on a downturn since last year when Hyundai and Kia launched competitive models," said Kim Pil-soo, an automotive engineering professor at Daelim University.
"Its latest price hike, which isn't happening at other carmakers, can further deteriorate its competitiveness."
Influx of new models
After nearly two decades, however, Tesla's competitors have mostly caught up with all of those strong points.
This year, new EV models from legacy automakers around the world will go head-to-head with Tesla in Korea's EV market, the world's seventh-largest.
Polestar, an EV subsidiary of Volvo, debuted in Korea early this year with the Polestar 2, which is often compared to the Tesla Model 3 due to their compact size and affordable price tags.
The Polestar 2 has logged 4,000 preorders already in Korea, according to the carmaker. It is able to run 417 kilometers (259 miles) per charge.
Volvo Cars is also aiming squarely at the domestic EV market with its first all-electric C40 Recharge SUV, which can run 356 kilometers per charge.
BMW and Mercedes-Benz Korea are looking to Korea's high-end EV market, taking advantage of Tesla's absence. Tesla's high-end models — Model X and Model S — are not sold in Korea at the moment.
BMW Korea is expected to launch the coupe-style i4 sedan and i7 SUV this year.
Mercedes-Benz Korea will release the electric EQB SUV and EQE sedan within this year.
Hyundai Motor and Kia, which had a successful year in 2021 with the Ioniq 5 and EV6, will newly launch the Ioniq 6 and a high-performance version of the EV6, dubbed the EV6 GT-Line.
BY JIN EUN-SOO [firstname.lastname@example.org]
BY JIN EUN-SOO [email@example.com]