In the first half of this year, American electric car company Tesla took the lead in South Korea’s electric vehicle market, surpassing Hyundai Motor and Kia. Industry analysts suggest the influx of ‘made-in-China’ electric vehicles has begun.
In the second half of last year, Tesla switched production of its flagship Model Y from the United States to China, reducing the price by 10 million to 20 million won from the previous model. Previously considered a luxury car in Korea, with prices reaching up to 100 million won in 2022 during the automotive semiconductor crisis, the Model Y’s starting price is now in the 50 million won range, comparable to Hyundai and Kia’s IONIQ 5 and EV6. This price reduction has driven a strong consumer response, increasing Tesla’s market share.
Historically, due to quality concerns, Korean consumers have hesitated to purchase expensive Chinese products. However, Tesla’s reputation and competitive pricing change this perception, showing that a global brand with strong market power can thrive in the EV market despite temporary downturns.
BYD, China’s top electric car maker, and ZEEKR, Geely Auto’s luxury brand, are set to enter the Korean market soon. Additionally, Volvo’s compact EX30 and BMW’s MINI Electric are expected to intensify competition, along with new electric vehicle launches from Hyundai and Kia.
According to a July 21 report by the Carisyou data research institute, Tesla sold 17,380 EVs in the first six months of this year, narrowly beating the second-place Kia with 16,537 and the third-place Hyundai with 16,056. This is the first time Tesla has surpassed Hyundai and Kia in electric vehicle sales since entering the Korean market in 2017. The Model Y rear-wheel drive, which accounted for more than half of all sales, was pivotal to this success.
At the beginning of last year, Tesla’s flagship in Korea was the U.S.-made Model Y Long Range, an all-wheel drive car with a nickel-cobalt-manganese (NCM) battery capable of traveling 511 kilometers on a single charge. In the second half of last year, Tesla switched to the Chinese-made Model Y Rear Wheel Drive, featuring a slightly less powerful but cheaper lithium iron phosphate (LFP) battery, now sold for 52.99 million won. This change resulted in a price drop of over 25 million won for the flagship model within a year, despite the reduced range of 356 kilometers per charge, and was well received by consumers.
In April, Tesla introduced the Model 3 mid-size sedan in China. It has a partially redesigned interior and exterior, with a starting price of 51.99 million won, down from 59.99 million in February last year.
The increased sales of Chinese-made Teslas in Korea are also linked to the reorganization of the global supply chain. Tesla produced around 900,000 vehicles at its Shanghai factory last year, which is nearly half of its global sales. With the U.S. and Europe recently tightening restrictions on Chinese-made electric cars, including higher tariffs, Tesla has been boosting exports to Asia and other regions, even cutting prices to accommodate the volume.
In the import market, the Tesla Model Y outsold BMW’s 5 Series and Mercedes-Benz E-Class, including internal combustion vehicles, in the first half of this year. These models have led the import market for over a decade. Tesla also surpassed Volvo and Lexus to rank third in brand sales, behind BMW and Mercedes-Benz.
