On a sales trend basis, represented by the rolling sum over a twelve-month period, Korean sales of Zero-Emission Vehicles (ZEVs), i.e. battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs), decreased , by 17% in the past year. while sales of HEVs (full and plug-in hybrids) increased by almost 45% in April 2024. Sales of ZEVs, 97% of which are BEVs, have been slowing since the second half of 2023, while HEV sales have increased with greater growth momentum from early 2023. BEVS sales have fallen over the past year, but hybrid sales have increased increased than the BEV losses.
Amid all the BEV hype, hybrid models have quietly made great strides in Korea, eclipsing many flashy BEVs and leaving them in their wake. Hybrid cars, which are still seen as a transition step towards full electrification, have never allowed fully electric vehicles to dominate the electrified vehicle market in Korea in the era of modern vehicle electrification.
We now believe that BEVs have convinced most Korean early adopters of electrification, but the majority of buyers are not yet ready for the ride. Most conventional buyers remain wary of the high costs associated with purchasing a BEV and charging it at commercial locations. In addition, charging speeds may be slow and the availability of charging stations may be limited. Lately, BEV owners are also seeing a growing percentage decline in the residual value of their vehicles. Feeling unsettled by a range of issues including range anxiety, charging anxiety and resale anxiety, mainstream buyers are finding good reasons not to buy BEVs, while many hybrid models are now available, with improved reliability and no apparent reason not to buy.
Due to the current slowdown in BEV sales, which has been called the first crisis of full electrification, many Korean OEMs are reconsidering the feasibility of hybrid models to meet consumer demands. Even though the return to the old-fashioned strategy is counterintuitive to the industry-wide commitments of recent years to decarbonize the economy, the Hyundai Group has positioned ‘hybrids’ as a business pillar, alongside their ZEVs, to drive the predictable future to help stimulate growth. After the failure of its previous BEV models in Korea, Renault Korea now looks set to fully focus on hybrid vehicles in the coming years as a means of reducing greenhouse gas emissions.
Despite everything stated above, we believe that a complete transition to CO2-free cars is necessary and inevitable. However, the transition may take longer than expected as HEVs play a more crucial role in soothing anxious drivers in Korea who may shy away from jumping straight into more expensive and less convenient BEVs and FCEVs. What is striking is that car buyers – and not politicians, regulators or car manufacturers – will ultimately dictate the pace of the transition.
Because current BEVs are too expensive for many, car manufacturers are seriously pursuing affordable BEVs. For example, Kia is launching the much-praised EV3, and Hyundai will soon launch a BEV version of its A-segment SUV, the Casper. The assumption that cost is the main reason consumers don’t buy BEVs may be too naive. In reality, BEV skeptics have a long list of real practical issues that support their rejection of BEVs.
Many self-proclaimed experts, who derided hybrids as a bridge technology to BEVs, once predicted that aggressive government regulation and a consumer preference for zero-emission models would quickly extinguish the hybrid market. However, the Korean case study proves that the bridge to full electrification is long. We owe hybrids an apology.
Korean Light Vehicle Forecasting Team, GlobalData
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center. For more details on GlobalData’s dedicated Global Light Vehicle Sales Forecast module, click here
“Korean Case Study: The Transition from Hybrids to BEVs Will Take Longer Than Expected” was originally created and published by Just Auto, a brand owned by GlobalData.
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