Hyundai Motor Group is intensifying its efforts to gain a larger share of the U.S. electric vehicle (EV) market, currently the second-largest globally for eco-friendly cars. The group, which ranks as the second top EV brand in the U.S., is offering substantial discounts of up to $7,500 on its electric vehicles. This move is aimed at expanding market presence amidst a decline in overall demand.
Hyundai Motor Co. is extending cash offers of $7,500 to purchasers of 2024 models of IONIQ 5, IONIQ 6, and KONA Electric in the U.S. This incentive, valid until the end of January, is reducing the retail prices significantly. For example, the IONIQ 6 SE, Hyundai’s most affordable option, is now priced lower than Tesla’s Model 3 Highland. Similarly, the Kona Electric’s price has dropped to as low as $25,175.
Kia Corp., Hyundai’s affiliate, is also adopting a similar strategy. Its U.S. unit, Kia America Inc., is offering cash incentives ranging from $3,000 to $7,500 for the EV6 and Niro EV models. This program, which started on January 3 and will run until March 4, includes a $7,500 cash offer for buyers of the 2023 EV6 and $5,000 for the 2024 version.
This discount strategy by Hyundai and Kia is noteworthy, especially since they are not eligible for the Inflation Reduction Act (IRA) benefits, which aim to boost the U.S.’s EV and related industries. The IRA provides up to $7,500 in federal subsidies, but Hyundai and Kia have not yet benefited from this policy as they don’t manufacture EVs in the U.S.
Despite this disadvantage, Hyundai and Kia have impressively sold around 94,000 EVs combined in the U.S. last year, making them the second-largest EV seller after Tesla, which sold approximately 655,000 units. This success is partly attributed to their proactive pricing strategies, including price reductions and lease discounts.
The shift to immediate cash incentives instead of tax credits under the IRA is reshaping the EV market’s dynamics. The U.S. government now allows consumers to receive the subsidy at the time of purchase, rather than waiting for tax credits. This change has increased the importance of EV price competitiveness.
The global EV market is poised for a cut-throat price war as automakers strive to revive demand amid lower government incentives and economic uncertainty. Notably, Volkswagen AG recently joined this price war by slashing prices on its ID line of EVs in Europe by up to 30%, following Tesla’s price reductions.
This competitive landscape highlights the challenges and strategies automakers like Hyundai and Kia are employing to maintain and grow their market presence in the evolving EV sector.
