The world’s two leading electric vehicle makers, Tesla Motors and BYD Auto Co, are set to hit the Korean market within this year. But questions remain over whether they can shake up the world‘s 10th-largest auto market that suffers from the sluggish EV sales.
The total sales of eco-friendly cars saw a growth of 68 percent in the first 10 months of this year with a total of 53,631 units sold. But 94 percent of the total were hybrid cars with the rest being plug-in hybrid EVs, pure EVs and fuel cell EVs, according to the Korea Automobile Manufacturers Association and the Korea Automobile Importers and Distributors Association on Sunday.
Despite support from the government, 2,896 units, or 5.4 percent of the entire eco-friendly cars sold here, were pure EVs. The sales of the pure EV has been on the rise with a 12 percent growth from the same period last year. But the number still is far short of the government’s projection of 10,000 EVs for 2016.
Industry watchers said the short driving range of the current available EVs -- mostly less than 200 kilometers -- and lack of infrastructure such as charging stations have put potential EV buyers on hold.
But the debuts of the world’s top two EV makers in the Korean market would provide a catalyst for the EV market here in spite of their contrasting entry tracks, they said.
In their foray into the Korean market, BYD will focus on public transportation while Tesla will target the premium market.
BYD Auto Co electric vehicles are displayed at the BYD headquarters in Shenzhen, China, Nov. 9. (Park Ga-young/The Korea Herald)
BYD, the world’s largest EV maker, officially registered for its branch in Jeju Province, the EV hub in Korea, according to the Shenzhen-based company on Thursday.
“At this early stage, our focus in Korea will be electric buses as we focus on public transportation for overseas markets,” a BYD official told the Korea Herald on the condition of anonymity. “But we cannot rule out the possibility of introducing other vehicles.”
BYD’s electric bus to be introduced in South Korea is the K9. Two local suppliers -- Ezwelfare Co and Suncore -- have already signed contracts with the Chinese company as regional distributors for the K9.
BYD’s debut comes as South Korea’s local governments EV initiatives are not being met by local supply. Jeju Gov. Won Hui-ryong last year said the city wanted to increase the supply of electric buses, but it was impossible to meet the demand by purchasing only Korean brands.
The Jeju municipal government plans to adopt a total of 110 electric buses by the end of 2017 and build 22,400 charging units around the island in 2017 as part of a plan to make a carbon free city by 2030. And BYD will start from there and expand to other parts of Korea along with many local governments’ push to run more EVs on the roads.
Tesla Motors showroom in Shenzhen, China (Park Ga-young/The Korea Herald)
US premium electric car maker Tesla, meanwhile, plans to go after up-market consumers, with its futuristic design with a long driving range, who have not been enticed by the available options. Tesla is setting up showrooms in Korea -- one in Starfield Hanam, some 20 kilometers southeast of Seoul, and another in bustling upscale Gangnam district.
Nicolas Villeger, director of North Asia and Southeast Asia at Tesla Motors, said on Nov. 18 at a conference in Seoul that the company will first launch the Model S and Model X next year before introducing the Model 3 with a lower price tag. Tesla’s Model S 90D, the first model undergoing the certificate and registration process in Korea, can travel up to 473 kilometers when fully charged but the price tag can go as high as $99,734, the price for Model S 90D sold in Japan.
Tesla’s models are not eligible for the current government subsidy program but Villeger said that the company is in negotiation with the Ministry of Environment to change the four-year-old program, arguing its standards lag behind advances in technology.
Although the two firms’ strategies are different in their entry into the Korean market, their debut will likely prompt up the local EV market as it is likely to boost competition.
“Since the market strategies are different among Tesla, BYD and domestic carmakers, the impact of Tesla and BYD will be limited in the short term. However, it will certainly provide a strong growth momentum for the overall domestic EV market in 2017,” Shin Jae-young, an analyst with LIG Investment & Securities Co. wrote on Wednesday.
By Park Ga-young (gypark@heraldcorp.com)
