Positive outlook for Toyota, BYD's expansion in PHEV market

Toyota Motor Korea CEO Manabu Konyama, right, poses with Yoshinori Futonagane, chief engineer of the carmaker's RAV4 SUV, at Hyatt Regency Incheon Paradise City on Yeongjong Island in the western port city, Tuesday. Courtesy of Toyota Motor Korea

By Lee Min-hyung

• Published Jun 25, 2026 7:00 AM KST

PHEVs still require subsidies for widespread adoption

Toyota and BYD are aggressively targeting Korea's niche plug-in hybrid electric vehicle (PHEV) market, a move experts and industry officials view as a highly viable strategy to capture transitional demand and capitalize on Hyundai Motor Group’s absence in the sector.

Local customers have not favored PHEVs due largely to their vague positioning between traditional hybrid cars and all-electric vehicles. PHEVs are also excluded from government subsidies here, making them compete at a distinct price disadvantage against typical electric vehicles (EVs).

While a standard hybrid self-charges and relies primarily on a gasoline engine, PHEVs utilize a larger battery that requires external charging to deliver all-electric driving.

According to data from the Ministry of Trade, Industry and Resources, PHEVs accounted for just 0.7 percent of the Korean passenger vehicle market between January and May, with 4,739 PHEVs newly registered. This represents a 24.6 percent decline compared to the same period last year.

Despite this structural hurdle, industry experts remained optimistic over the latest push by the foreign carmakers.

With Hyundai Motor Group having withdrawn from the domestic PHEV segment, a profitable niche has opened up. Mass-market brands such as Toyota and BYD are using PHEVs to avoid direct competition with the exceptionally strong domestic carmaker, and win over buyers who desire electric efficiency without anxiety over travel distance and running out of battery power on the road.

The production cost for PHEVs has also dropped significantly in recent years, boosting their pricing competitiveness.

Toyota Motor Korea recently launched the latest model of its RAV4 SUV, featuring a lineup dedicated exclusively to hybrid and PHEV variants.

According to the carmaker, the PHEV variant accounted for some 30 percent of the model's preorders.

BYD Korea also plans to unveil its Sealion 6 DM-i at the upcoming Busan International Mobility Show. Powered by its proprietary DM-i system, the midsize SUV operates as an electric-centric hybrid, prioritizing the electric motor over the internal combustion engine for better responsiveness. It offers an electric range exceeding 70 kilometers alongside fast-charging capabilities.

"The absence of Hyundai Motor and Kia in the domestic PHEV market creates a strong window of opportunity for Toyota and BYD," said Kim Pil-soo, a professor of automotive technology at Daelim University.

"Toyota possesses world-class hybrid expertise, and its localized PHEV offerings look to be highly competitive. Similarly, BYD can maintain its current sales momentum by adding PHEVs to its successful Atto 3 and Sealion 6 EV lineups."

However, price and policy remain key obstacles for PHEVs’ growth here.

"PHEV batteries are still large and expensive, meaning it takes at least three to four years of driving to offset the initial premium over a gasoline car," Kim said.

"The biggest hurdle is that the Ministry of Environment restricts eco-friendly subsidies strictly to EVs. Providing even a partial incentive for PHEVs would be a far more rational approach to the growth of the nation’s eco-friendly vehicle market ahead of mass adoption of all-electric cars.”

Industry officials also displayed a positive response to the carmakers’ latest push for PHEVs.

“PHEVs are attractive options for customers who seek longer electric driving range than typical hybrids and remain hesitant to purchasing EVs,” an official from the auto industry said.