Hyundai Motor and Tesla have ignited a fierce electric vehicle price war in the US, slashing prices and rolling out budget models in a bid to defend their footing in the world’s second-largest EV market.
According to industry sources on Tuesday, Hyundai Motor is continuing its aggressive price cutting strategy launched earlier this month, reducing prices on the 2026 Ioniq 5 by up to $9,800 and offering a $7,500 cash rebate on the 2025 model.
Hyundai Motor America CEO Randy Parker had mentioned, “Hyundai is taking bold action to ensure the Ioniq 5 remains the top choice for EV buyers. … These price adjustments reflect our strong commitment to customers and to strengthen our leadership in the EV market.”
Hyundai’s decision to cut prices — despite mounting cost pressures from the US’s 25 percent auto tariffs and the expiration of federal EV consumer subsidies in September — is partly seen as a strategic move to counter Tesla’s launch of more affordable battery-powered car models.
On Oct. 7, Tesla rolled out new standard trims for its Model 3 sedan and Model Y SUV in the US market, introducing lower-spec, more affordable versions of its existing lineup. The Model 3 starts at $36,990, about $5,500 less than the previous version, while the Model Y is priced at $39,990, roughly $5,000 cheaper.
The cost savings were reportedly achieved through streamlined production. The new trims come with a 10 percent smaller battery pack — reducing driving range from 575 kilometers to 516 kilometers — and feature cloth seats instead of leather, no ventilated seats, smaller 18-inch wheels and manual controls for the steering wheel and side mirrors.
Tesla’s $30,000-range EVs pose a significant threat to Hyundai Motor and its smaller sibling Kia in the US EV market. The price dynamics have already shifted — the Kia EV6 SUV, previously cheaper than the Model Y at $42,900, now costs more than Model Y’s new Standard trim.
Hyundai’s maximum $9,800 price cut on the 2026 Ioniq 5 — another direct rival to Tesla’s Model Y, alongside Kia EV6 — brings the SUV’s starting price down to $36,600, making it about $3,390 less expensive than the new Model Y Standard.
Industry insiders warn that this series of drastic yet inevitable price adjustments could eat away at automakers’ profits.
“Hyundai’s profitability could take a hit due to the EV price war in the US,” said Kim Pil-su, a car engineering professor at Daelim University. “Still, the market is simply too important to lose ground in, despite mounting cost pressures.”
“The carmaker is expected to offset the impact through a differentiated pricing strategy across its lineup. This will likely include modest price increases for premium models like Genesis and other high-margin vehicles to balance the effect of steep discounts on mass-market EVs,” Kim added.
In September, Hyundai Motor and Kia sold 17,269 fully electric vehicles in the US. Tesla delivered an estimated 58,750 units in its home market in the same period, according to data from Motor Intelligence, a US-based automotive market tracker.
hyejin2@heraldcorp.com
