Tesla brings sea change in Korea's imported car market
Tesla's Model 3 which was first introduced in August 2019./ Courtesy of Tesla
US carmaker takes 50% of EV market here
By Kim Hyun-bin
Tesla, the world's leading electric vehicle (EV) manufacturer, is rapidly gaining traction in the Korean market, changing the pecking order of imported car sales here dominated by the top two market leaders Mercedes-Benz and BMW.
The rise of the U.S. carmaker here is due to growing demand for EVs triggered by the increase in the eco-friendly consumer base and government subsidies for EVs.
According to the Ministry of Trade, Industry and Energy, Tesla reached 4,070 vehicle sales in the first quarter this year, ranking third in the imported car market just behind Mercedes-Benz and BMW. Most of its sales came between February and March reporting 1,433 and 2,499 sales respectively.
Mercedes-Benz and BMW logged 15,400 and 11,331 sales in the first quarter accounting for 28.2 percent and 20.7 percent market shares respectively. GM Chevrolet sold 3,810 vehicles, while Tesla sold more vehicles than either Volvo or Audi in the first quarter.
“As Korean consumers have been taking part in the innovation, Tesla took over 11 percent of the imported cars market in March,” said Lim Eun-young, an analyst at Samsung Securities.
The company first entered the Korean market in 2017 and sales started to skyrocket after the introduction last August of the Model 3, which was released with a price tag of 52 million won ($46,000).
Tesla CEO Elon Musk Reuters
According to Tesla Korea, the Model 3 took a crucial role in the company's growth as it increased 72 percent in March compared to the previous month selling 2,499 vehicles.
At the end of October last year, registered Tesla vehicles in the country stood at 1,599 but the number more than quadrupled to 7,400 by the end of March.
Tesla took over half of the total EV sales, which reached 8,831 for the first quarter.
The growth is significant at a time when most companies have been suffering sluggish production since February due to the COVID-19 pandemic.
Tesla's presence in the local EV market is expected to strengthen further in the coming months.
“The momentum of the EV market is expected to strengthen in the second quarter and latter half of the year. The Chinese factory operations are picking up steam and the Model Y is also predicted to accelerate growth as well as prompt other carmakers to adapt their EV strategies,” said Park Yeon-ju, an analyst at Mirae Asset.
The Korean government subsidies also played a role in expanding the EV market. This year 8 million won is provided for consumers who purchase Tesla's Model 3.
The Seoul Metropolitan Government has increased its EV subsidies up to a maximum 18.2 million won per vehicle and expanded the number of EV models that could benefit, from just four brands from Hyundai and Kia to 19 models from seven manufacturers, including Tesla's Model 3 and Model S.
Other Tesla models sold in Korea are the Model S and Model X, which sell at the starting prices of 111 million won and 119 million won, respectively.
Since it entered the Korean market in March 2017, Tesla has built over 172 slow-charging stations and 22 superchargers across the country. Tesla's EVs take more than 10 hours to fully charge at a slow charger, but about an hour at a supercharger.
The Korean government plans to invest in the newly developed car market by pouring in 385.6 billion won ($326.2 million) on research and development projects for eco-friendly vehicle parts.
According to the trade ministry, the project will run through 2026 and is focused on aiding small and midsized enterprises.
Tesla also showed strength in the global market. The company manufactured 103,000 vehicles and delivered 88,400, marking the largest performance growth in the first quarter.
The new EV sales have been reduced by 56 percent to 114,000 in the Chinese market for the first quarter, but Tesla still sold over 15,700 Model 3 EVs topping the Chinese market's eco-friendly sector.