BYD Excluded, Hyundai Lags Behind... Tesla Boldly Hikes Prices by 7 Million Won

Price Hiked by 7 Million Won After Subsidy Confirmation
Tesla Dominates Imported Car Market with 30.8% Share
BYD Excluded from Subsidy, Hyundai Delays Autonomous Driving

On the first day that government subsidies resumed for the second half of the year, Tesla, the American electric vehicle manufacturer, abruptly raised the price of its popular models in Korea by up to 7 million won. With Chinese automaker BYD excluded from the subsidy program, Tesla appears to be leveraging its overwhelming market share in the domestic imported car market to engage in "bold pricing."

Tesla: One in Three Imported Cars

According to the automotive industry on July 2, Tesla Korea increased the domestic prices of its flagship models, the Model 3 and Model Y, by up to 7 million won per trim on July 1, the first day the new EV subsidy program took effect in the second half of the year. These models, whose prices have just been raised, are currently the best-selling electric vehicles in the Korean market.

The key factor enabling Tesla to raise prices so aggressively is its overwhelming sales volume in Korea.

Tesla Model Y. Tesla

According to the Korea Automobile Importers & Distributors Association (KAIDA), Tesla sold a total of 56,139 vehicles in Korea from January to June this year. This represents an explosive increase of 192.2% compared to 19,212 units sold in the first half of last year. During this period, Tesla accounted for 30.51% of all imported cars sold in Korea (184,032 units), meaning that one out of every three imported vehicles was a Tesla.

In particular, the exclusion of BYD—which had been rapidly increasing its market share in the imported car sector by emphasizing price competitiveness—from subsidy eligibility also appears to have influenced Tesla’s decision to raise prices.

Until now, the government provided subsidies for electric vehicles priced under 85 million won, regardless of whether they were made in Korea. However, starting in the second half of this year, subsidies are only available to companies selected by the government based on criteria such as contribution to the automotive industry and safety. BYD ultimately failed to make the final selection list for passenger vehicles. For example, BYD’s flagship model, the Sealion, had been eligible for a 1.88 million won subsidy when purchased in Seoul, but will now be excluded from subsidies until the program is reviewed again in the first half of next year.

BYD ranked fourth in imported car sales from January to June this year, selling 11,675 units and surpassing Lexus (7,819 units), Volvo (7,470 units), and Audi (7,337 units). This was a jump of 10 spots from 14th place during the same period last year, but the outlook for the second half has dimmed due to the loss of subsidy eligibility.

Tesla has continued to raise prices this year. Back in April, in response to changes in the government’s EV subsidy program, it increased the prices of major models such as the Model 3 Performance, Model Y Long Range AWD, and Model Y L by up to 5 million won.

Rising Hopes for FSD... Hyundai’s Progress Remains Slow

Behind Tesla’s bold confidence lies the strong fanbase and growing expectations for its distinctive autonomous driving software, Full Self-Driving (FSD).

Currently, FSD can only be operated in Korea on certain new U.S.-made vehicles. However, Tesla has announced plans to release the "FSD V14 Lite" version, which can be applied even to older models launched nearly seven years ago. While its introduction in Korea has not yet been officially confirmed, anticipation for FSD activation is growing among both early buyers and potential customers.

In contrast, Hyundai Motor Company, the leading domestic automaker, is considered to be lagging behind in this race. Hyundai has announced a roadmap to commercialize highway autonomous driving next year and city driving technology by 2029. With a gap of several years in software competitiveness, consumers are left with little choice but to continue choosing Tesla despite dissatisfaction with price hikes.

Meanwhile, Tesla is not only dominating the imported car market but is also threatening the overall domestic market. Last month, the best-selling vehicle in Korea was not a Hyundai or Kia, but Tesla’s Model Y. With 8,762 units sold domestically, it overtook the Kia Sorento—which had held the top spot for over two years—to become the best-selling vehicle among both domestic and imported cars. This marks the first time in the history of related statistics that a single imported model has ranked number one in monthly sales.

An industry official commented, "Raising prices as soon as subsidies begin could be seen as taking advantage of Korean consumers, but in reality, there is a lack of attractive domestic or imported EV alternatives at the moment." The official predicted, "Tesla’s market dominance is likely to continue for the time being."

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