[Conference Call] Kia to Cut EV Costs by 10% Annually for Next 3 Years, Accelerating Profitability Improvements

Kia plans to reduce the cost of key components by around 10% annually over the next three years to improve the profitability of its electric vehicle (EV) business. The company aims to boost cost competitiveness while maintaining its sales expansion strategy despite short-term pressure on profitability, with the goal of achieving EV profitability on par with hybrid electric vehicles (HEVs) within two to three years.

Kim Seungjun, executive vice president and head of Kia's Finance Division, said during the conference call on the company's third-quarter earnings on October 30, "For EVs, it is important to reduce costs and increase scale," adding, "We plan to pursue cost reductions of around 10% per year over the next three years."

Kia's Yangjae headquarters. Kia

The cost-cutting effort will not be limited to batteries. Kia plans to improve its cost structure by expanding the scope to include key components related to EV propulsion and thermal management, such as motors and heat pumps. The company expects that, by normalizing incentives and cutting internal costs, EVs will be able to generate profits like HEVs within two to three years.

Kia said it will not change its strategy to expand EV sales because of a short-term deterioration in profitability. "It would not be the right direction to give up on EVs because profitability is falling in the short term," Kim said. "We plan to continue with our existing strategy through this year and next year."

Kia also cited the accelerating transition to electrification in Europe as a factor behind its strategy. Kim said the company believes it would be difficult to survive in the market without securing competitiveness in EV sales in Europe, and explained that Kia must respond to the trend of a shrinking internal combustion engine vehicle market and a growing EV market.

Kia emphasized that its HEVs also initially faced challenges in achieving profitability and sufficient sales volumes, but now generate profits comparable to those of internal combustion engine vehicles. The company believes that EVs, too, can enter a path toward improved profitability around 2027-2028 if it increases sales volumes and improves its cost structure.

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