High price, quality issues slow Kia EV9 sales in Korea

Kia Corp., South Korea’s No. 2 automaker, is struggling to sell its flagship large all-electric sport utility vehicle EV9 at home as high price tags and quality issues are driving customers to seek other vehicles.

The affiliate of the nation’s auto industry leader Hyundai Motor Co. sold only 408 EV9s in Korea last month, less than a third of the 1,334 units in June and 1,251 units in July, respectively, according to Kia on Thursday. The company sold about 7,300 units of the EV6, its first dedicated EV built on Hyundai Motor Group’s new platform, within three months of its launch.

The EV9 had enjoyed pre-orders from more than 10,000 customers before it was introduced thanks to the mileage of 501 kilometers (311 miles) on a single charge, the farthest among Kia EV models, and various convenience features including a remote smart parking system.

TOO EXPENSIVE

All the contracts failed to lead to strong sales, however, due to the car's price and some quality problems.

The most expensive model with all options costs about 100 million won ($74,850) in South Korea, although the price comes down to around 70 million won with the country’s subsidies for EVs. That is almost double the price of the entry-level Palisade, Hyundai’s mid-sized SUV, and the Carnival, Kia’s minivan.

The company said it was difficult to cut EV9’s price as the electric SUV has a battery of 99.8 kilowatt hour (kWh). Battery costs usually make up about 45% of EV production expenses, according to industry sources.

Its competitors, however, rushed to lower EV prices to lure drivers amid slower growth in the clean vehicle sector. Tesla Inc., the world’s top EV maker, introduced the Model Y made in China equipped with low-priced lithium iron phosphate (LFP) batteries. South Korean customers can buy the all-electric SUV at around mid-40 million won with state subsidies.

German luxury carmakers – Mercedes-Benz, BMW and Audi – are offering discounts of up to 26 million won for EVs including the EQS SUV in the Asian country. KG Mobility Corp., formerly Ssangyong Motor Co., plans to launch the Torres EVX, an electric trim of its mid-sized SUV, at price of mid-30 million won next month.

“An aggressive pricing policy is necessary to expand EV market shares at the expense of profitability,” said Lim Eun-young, a senior auto analyst at Samsung Securities Co. “The profitability in the EV sector is created by autonomous driving and other services rather than car sales.”

QUALITY ISSUES

A few quality issues also put the brakes on the EV9's popularity.

Kia repaired the EV for free due to errors in lamp control signals, charging controls and other systems last month, according to the Ministry of Land, Infrastructure and Transport. Some critics said it is possible for the flagship electric SUV to suddenly stop while driving as an error was found in the software design of the rear-wheel drive motor control device.

The automaker hopes overseas shipments of the EV9 will boost its overall sales. It is scheduled to launch the EV in the US during the fourth quarter while considering details of the introduction such as the date for pre-orders and prices.

It plans to manufacture the model at its plant in the US state of Georgia from as early as next year to allow customers to benefit from tax credits of up to $7,500 per unit under the Inflation Reduction Act.

Write to Jung Dong Noh at dong2@hankyung.com
 
Jongwoo Cheon edited this article.