A New Policy for the New Age

The South Korean government recently unveiled an electrifying new plan tailored to energize domestic automakers Hyundai and Kia, while sidelining the competitive edge of Tesla Inc.’s Model Y and the dominance of Chinese powerhouse BYD Co.

Seismic Shift in the EV Market

The freshly-minted EV policy, disclosed on Wednesday, is designed to provide South Korean automobile manufacturers with an upper hand in the global EV market, a comeback to the price plummets of Tesla’s Model Y and the models from BYD, which utilize cut-rate LFP batteries.

Yang Jin-Soo, Hyundai’s Business Research Center auto group leader, emphasized that the price slumps from Tesla and the ascendancy of BYD have reverberated across the global EV market, igniting a fierce pricing war. The revamped policy is devised to lend a helping hand to domestic automakers in squaring off on equal footing.

A Shock to the System

The new plan places the maximum grant at approximately $4,800 (6.5 million won), a notch lower by $225 (300,000 won) compared to the previous policy. The vehicle’s range, price, and battery type are pivotal in determining its eligibility. The battery type takes center stage in the new policy, with notably diminished subsidies for EVs with “lower-performance batteries,” such as LFP batteries from China.

The revised policy slaps a cap at $41,000, plunging from around $43,000 last year. This translates to Hyundai’s IONIQ 5 potentially garnering an over $2,800 subsidy advantage over the Model Y.

Why It’s Worth the Fuss

This groundbreaking EV policy beckons at a time where Tesla’s Model Y has been stirring up waves globally, clinching the crown as the foremost EV to achieve top-notch global car sales. Last year, BYD also clinched victory over the American company as the dome-dwelling seller of BEV vehicles.

Tesla’s introduction of its more economical Model Y with an LFP battery last year led to a substantial surge in sales in South Korea. Priced $16,000 lower than other variants, Tesla’s sales reportedly skyrocketed by nearly 876% in September alone, commanding about 10% of Korea’s entire EV market within four months.

Hyundai, meanwhile, has been cementing its status as a fierce competitor in the EV market, with its Ioniq 5 spearheading the company’s sales. The new policy has the potential to fortify Hyundai’s position in the market, presenting a formidable challenge to Tesla’s dominance.

This article was engineered by Benzinga Neuro, Edited by Ramakrishnan M

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