Sales of Chinese electric vehicle manufacturer BYD are delayed in South Korea. This is because it has not yet met the requirements to receive electric vehicle subsidies even though it has been two months since its entry into the domestic market. As competitors have already started selling, the longer the confirmation of subsidies is delayed, the more likely BYD will record poor performance this year.
According to the automobile industry on the 16th, BYD Korea recently posted an apology regarding delivery delays on its website. Since January 16, BYD has been accepting pre-orders for its first domestic model, the compact Sports Utility Vehicle (SUV) Atto 3, but has not delivered it yet.
The Atto 3 passed the certification process from three agencies: the Ministry of Trade, Industry and Energy, the Ministry of Environment, and the Ministry of Land, Infrastructure and Transport last year. However, it has not completed the final steps before delivery, including the Ministry of Environment's calculation of electric vehicle subsidies and the Ministry of Trade, Industry and Energy's registration of environmentally friendly vehicles.
Starting this year, the Ministry of Environment requires manufacturers to equip vehicles with battery charging information (State of Charge) to calculate electric vehicle subsidies, but BYD has not applied this. BYD submitted a letter of assurance to provide battery charging information within a year, but the Ministry of Environment is said to have requested additional materials for the subsidy calculation.
With the delay in delivery, customer complaints have also increased as it has been more than two months since the pre-orders were accepted. BYD has tried to appease customers by offering a charging benefit worth 300,000 won for all pre-order customers upon vehicle delivery, but complaints and inquiries about contract cancellations have reportedly increased recently.
As the delivery delays continue, expectations that BYD would create an early buzz in the domestic market have also diminished. Hyundai Motor, Kia, and Tesla have already completed subsidy calculations and commenced sales last month. Typically, subsidy calculations are completed in February, but this year they were finalized a month earlier in January.
Kia sold 2,045 units of the EV3 and 859 units of the EV6 last month. Hyundai Motor also sold 1,357 units of its competing model, the Ioniq 5. Tesla recorded total sales of 2,222 units last month, led by its flagship model, the Model Y (2,040 units).
Industry experts largely predict that BYD will find it difficult to meet the Ministry of Environment's standards within this month. If the subsidy calculation is completed at the end of next month, actual sales would begin in May. This would mean a three-month delay compared to key competitors like Hyundai Motor and Kia, who began sales in February.
Hyundai Motor and Kia are also increasing the discounts on electric vehicles since BYD entered the domestic market. Hyundai Motor has discounted the Ioniq 5 and Ioniq 6 by 1 million won, while the selling price of the Ioniq 9, a large SUV released this year, has been set lower than expected at around 60 million won. Kia has applied discounts of up to 2.5 million won for models like the Niro EV and EV6.
An industry insider said, "Sales of electric vehicles typically surge right after the subsidy confirmation, so the first quarter's performance often determines the annual outcome," adding, "Even if BYD starts selling after belatedly receiving the subsidy calculation, there is a high possibility that a significant portion of the local government subsidies will already be exhausted by that time."