Subsidy rules cut power to KG Mobility's Torres EVX sales

KG Mobility Chairman Kwak Jea-sun poses with a Torres EVX during a press event held at Kintex, Gyeonggi, in March. [NEWS1]

KG Mobility is the latest surprise victim of the government's strengthened EV subsidy regulations with disappointing sales figures for the Torres EVX, an electric version of the large-hit Torres SUV.

The result comes at the worst time as the Korean automaker finally succeeded in posting a profit last year for the first time in 16 years.

KG Mobility sold a total of 2,748 vehicles in February, down 27 percent from the previous month when it sold 3,762 units, according to data from the Korea Automobile & Mobility Association.

Only 427 Torres EVX were sold during the month.

The EVX was an ambitious model for KG Mobility as it was the automaker's first pure EV since the company changed its name from SsangYong Motor last year.

The slump in sales comes as the Korean government cut the maximum subsidy for the Torres EVX to around 4.5 million won ($3,420) compared to 6.6 million won last year.

The Environment Ministry has strengthened EV regulations this year, cutting subsidies for EVs that use Chinese lithium iron phosphate (LFP) batteries. LFP batteries are around 40 percent cheaper than nickel cobalt manganese (NCM) batteries, for which Korean makers hold a firmer standing, but some 90 percent of the world's LFP batteries are made by Chinese manufacturers, with CATL and BYD racing for the top two spots.

KG aims for a revival once again with a few EV models waiting to be released later this year. The Korando EV, equipped with LFP batteries, will hit the domestic market in the second quarter.

A coupe version of Torres will hit the market in the third quarter, while the O100, the country's very first electric pickup truck, is set to be released in the fourth quarter.

"It is anticipated that sales will rebound this year with the new lineup," said Yoo Seong-man, a researcher at Leading Investment & Securities.

KG Mobility swung to 5 billion won in operating profit last year for the first time in 16 years as revenue rose 9 percent to 3.7 trillion won, an all-time high since its establishment in 1954.

BY SARAH CHEA, KO SUK-HYUN [chea.sarah@joongang.co.kr]