Hyundai Motor welcomes Tesla's challenge

U.S.-based luxury electric automaker Tesla’s newly launched Tesla Model 3 sedan is displayed during its unveiling in Hawthorne, California, March 31 (KST). Tesla CEO Elon Musk said the Tesla Model 3 is sold starting at $35,000. / Yonhap

By Jhoo Dong-chan

Hyundai Motor Group, Korea’s top automaker, refuted claims that a new budget electric vehicle (EV) introduced by U.S. based Tesla may steal its domestic market share, citing its competitive price strategy.

“Tesla’s Model 3 won’t influence Hyundai Motor in sales at home any time soon as the price of the model is still too expensive and the nation’s infrastructure for EVs has not been fully established yet,” said a Hyundai official, Thursday.

The price of the Model 3 starts at $35,000 without government subsidies and incentives. In Korea, the price is expected to reach about $40,000.

“It will cost around 43 million won in Korea for a Tesla, considering dealers’ margins and additional fees. The consumer price even with government incentives for green cars is expected to be well over 30 million won,” he said.

“Hyundai’s latest Ioniq hybrid EV is currently being sold for between 21 million won and 24 million won with government subsidies, cheap enough to compete with the Tesla Model 3.”

He said Hyundai welcomes Tesla’s plan to advance into the Korean market, as the entrance of the Model 3 is expected to awaken idling demand for EVs, helping the local auto industry build new momentum.

Tesla CEO Elon Musk recently said the US automaker has so far received a total of 253,000 preorders for the Model 3 since its March 31 launch. The monetary value of the preorders is 13 trillion won ($11.3 billion).

Experts have said the Model 3 is competitive in all measures, as the company’s first four-door compact EV sedan can travel a maximum of 346 kilometers on a fully charged battery and does 0 to 100 kph in six seconds, as fast as gasoline- or diesel-engine sedans in the segment.

“The Model 3’s unprecedented success is expected to have negative effects on Korea’s Hyundai Motor and Kia Motors who recently launched a series of hybrid electric vehicles (HEVs) including the Ioniq compact sedan and the Niro SUV,” said an industry official, on condition of anonymity.

In contrast, Hyundai Motor’s latest hybrid EV has a 180 kilometer range on a full charge, half that of the Tesla. And its 0 to 100 kph is around 10 seconds, far slower than the Model 3.

But as the Model 3 won’t be available here until late 2017 at the earliest, it seems unlikely that it will have any imminent impact on the nation’s automakers, according to analysts.

Mixed response

Although Hyundai Motors has seen a decline in its stock price since the introduction of the Model 3, the automaker said its latest stock price falls have no relation with the latest Tesla vehicle.

“The company’s stock price is rather affected by poor sales in China and Latin America, nothing to do with the Tesla Model 3,” said another official.

Shares in Hyundai Motor rose 1.74 percent, Thursday, to close at 146,500 won on the nation’s main bourse.

Its previous peak was 159,000 won, March 22. Its share price has since declined nine days in a row, falling as low as 144,000 won. The share price of the company’s sister automaker Kia Motors also fell 10.7 percent in the last nine days.

According to the Ministry of Environment, a total of 337 high-speed battery charger stations are currently in operation across the country. The ministry has promised to increase the number to 600 in 2018, but experts say this is not enough.

“In order to have more EVs on the street, I believe battery charger stations should be as many as the current number of LPG charge stations nationwide, which is around 2,000,” an industry official said.