'Lease Sales Limit'... Hyundai Motor and Kia Rank Last in US Electric Vehicle Sales Growth in First Half of the Year

Sales Volume Surpasses GM to Rank 2nd
But Growth Rate Is the 'Lowest'
Limitations Reached in Lease Sales Response
"IRA Response Will Determine Future Competitiveness"

Hyundai Motor Company and Kia surpassed GM to rank second in electric vehicle sales in the United States during the first half of the year. However, their growth rate is lower compared to competitors. Since they did not qualify for the Inflation Reduction Act (IRA), they responded with lease sales, but it appears they have reached their limit.

According to market research firm Wards Intelligence, Hyundai and Kia sold a total of 36,886 pure electric vehicles in the U.S. during the first half of this year. They ranked second after Tesla (318,500 units). GM (36,322 units), Ford (25,709 units), and Mercedes-Benz (23,071 units) followed. Hyundai sold 23,655 electric vehicles, a 51% increase compared to last year. The Korea Automobile Mobility Industry Association analyzed that this was due to the effect of newly launching electric vehicles such as the G80, GV70, and Ioniq 6 in the U.S. Kia sold 13,231 units in the first half of this year. Looking at the sales rankings by model, Hyundai’s Ioniq 5 ranked 7th with 13,641 units, while Kia’s EV6 ranked 10th with 8,328 units.

The reason for the strong performance of the two companies is attributed to their strategy of strengthening corporate (lease) sales. In January, the U.S. administration finalized the incentive eligibility requirements for commercial electric vehicle sales, including corporate sales. The policy states that electric vehicles supplied in lease and rental formats receive tax benefits regardless of various conditions. Utilizing this, Hyundai and Kia increased the proportion of commercial electric vehicle lease sales from the previous 2-3% to about 30%.

However, the overall growth rate of electric vehicle sales is at the bottom level. Compared to the first half of last year, the two companies’ electric vehicle sales increased by 7%, the lowest among the top 10 companies by sales volume. The company with the highest growth rate was Toyota (1959%). Mercedes-Benz (470%), GM (364%), Rivian (353%), and BMW (220%) followed. The total pure electric vehicle sales in the U.S. also rose 59% year-over-year to 531,182 units. In other words, Hyundai and Kia are the second tallest in terms of sales volume, but they grew less than others compared to last year.

What should be done to widen the narrowing gap again? They need to enhance their IRA responsiveness to secure price competitiveness by benefiting from subsidies. Whether a vehicle qualifies for subsidies under IRA provisions is directly linked to sales volume. Most models from U.S.-based brands (Tesla, GM, Ford, etc.), except for high-end lines, are eligible for incentives (up to $7,500) because they meet the IRA condition of being “final assembly in North America.” Leveraging this, U.S. brands sold 400,121 electric vehicles in the first half of this year, a 55.8% increase from 256,742 units in the first half of last year. In contrast, Hyundai and Kia currently do not qualify for IRA and thus do not receive electric vehicle subsidies. Both companies produce electric vehicles in domestic factories and export all units. They do not meet the North American final assembly condition. To address this, Hyundai Motor Group is building a dedicated electric vehicle factory in Georgia, U.S., which is expected to begin operations as early as the second half of next year.

Hyundai and Kia, which import most minerals and battery materials from China, also need to reorganize their supply chains. Battery-related regulations are becoming increasingly stringent. To receive tax credits, the mandatory usage ratio of critical minerals and battery components sourced from the U.S. or countries with which the U.S. has free trade agreements must be increased. This year, the ratios were 40% and 50%, respectively, but they will rise to 50% and 60% next year. Hyundai’s GV70 electric vehicle produced in the U.S. did not meet these conditions and thus did not receive subsidies. IRA responsiveness will determine future competitiveness in the U.S. electric vehicle market.

This content was produced with the assistance of AI translation services.