Cheap Prices Win... High Demand for Chinese Battery Electric Vehicles

Ray Electric Vehicle, Some Models Priced 20 Million KRW Lower
Purchase Subsidies Total Over 6 Million KRW Including National and Local Funds
Vehicle Price Reduced Using Chinese Batteries
Tesla Model Y and KG Torres Electric Vehicle
"Electrification Accelerates Centered on Low-Cost Electric Vehicles"

Kia's electric vehicle Ray EV, based on the compact car Ray, has had its subsidy confirmed. Combining the national subsidy and local government support, the purchase price in some areas of Jeonnam can be in the 16 million KRW range, and in Seoul, it is possible to buy it in the low 20 million KRW range. The purchase burden is less than expected, and it is reported that inquiries from prospective buyers are flooding the frontline sales sites.

According to the announcement on the Zero Emission Vehicle Integrated Website on the 8th, the national subsidy for the Ray EV is 5.12 million KRW. The national subsidy can be up to 6.8 million KRW, considering the electric vehicle's performance, price, charging infrastructure, and so on. In addition, each local government sets a certain limit and provides local subsidies matching the national subsidy. The Ray EV receives about 75% of the national subsidy limit, so the local subsidy is also about 75% of the maximum amount.

Kia Ray Electric Vehicle

Including local subsidies, in Seoul, the subsidy is about 6.47 million KRW, and in Daegu or Incheon, it is about 7.75 million KRW. In Gwangyang, Jeonnam, where the subsidy is large, it can reach up to 11.52 million KRW. The price of the Ray EV for the 4-seater passenger car is 27.75 million KRW for the basic model (Light) and 29.55 million KRW for the high-end model (Air). Adding various optional features increases the price by about 1.25 to 2.95 million KRW, reaching the low 30 million KRW range.

In Seoul, minimizing options on the basic model means it can be purchased for about 21.28 million KRW, and in Daegu or Incheon, for about 20 million KRW. Residents of Gwangyang can get it for about 16.23 million KRW. The 2-seater van model of the Ray EV costs between 27.45 million and 27.95 million KRW, and the 1-seater van is 100,000 to 150,000 KRW cheaper. Individual business owners such as self-employed persons can buy it for under 20 million KRW with small tax refund benefits and others.

Kia Ray Electric Vehicle 2-Seater Van Model

Considering the recent surge in new car prices due to rising raw material costs, prospective buyers see the new Ray as competitively priced. The initial Ray EV released in 2011 had a short driving range of around 100 km but was priced high at 45 million KRW, making it difficult to purchase.

The main reason for the price reduction is the inexpensive battery. The lithium iron phosphate (LFP) battery used in the Ray EV has somewhat lower performance in terms of driving range but is cheaper. It was mainly used in Chinese electric vehicles in the past but has recently been widely adopted. Kia is the first domestic electric vehicle manufacturer to use LFP batteries.

The recently introduced Tesla Model Y rear-wheel drive in Korea also uses Chinese-made LFP batteries. Last month, new registrations reached 431 units, more than six times the number in July. It is reported that pre-orders exceeded 20,000 units after the domestic launch news was announced. Price competitiveness is also cited as the main advantage. The domestic selling price is 56.99 million KRW, more than 20 million KRW cheaper than the previous model.

The national subsidy is 5.14 million KRW, meeting the 100% subsidy criterion of 57 million KRW or less. If purchased in Seoul, the price is about 50.49 million KRW, and in Daegu or Incheon, about 49.21 million KRW. In regions offering higher subsidies, the purchase burden can be reduced to the low to mid 40 million KRW range.

Tesla vehicle charging at a charging station in Beijing, China

KG Mobility's first electric vehicle, the Torres EVX, scheduled for domestic release on the 20th, also uses LFP batteries. It uses batteries from the Chinese battery and electric vehicle maker BYD, featuring a cell-to-pack design that eliminates the intermediate module stage to improve space utilization and energy efficiency. The price is under review at around 49 million KRW for the basic model and around 52 million KRW for the high-end model. The company expects that with subsidies, the price will be in the mid-30 million KRW range.

Although battery prices have somewhat declined compared to the past, they still account for a large portion of electric vehicle costs. Due to the faster-than-expected spread of electric vehicles and increased battery demand, raw material prices have risen, slowing the battery price decline that had continued for several years since last year. As high prices are cited as one reason for the recent slowdown in electric vehicle adoption, the industry expects demand for cheaper 'entry-level' electric vehicles to emerge.

Junseong Kim, a researcher at Meritz Securities, said in a recent report, "The pure electric vehicle market will exceed 25% of global demand by 2025, and popularization will focus on vehicles priced below $27,810 (the average global vehicle selling price this year)." He added, "To raise the corporate value of existing automakers, a lineup of low-priced electric vehicles is necessary."

The exhibition booth of Chinese electric vehicle maker BYD, which participated in IAA 2023 held recently in Munich, Germany

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