Korean automakers quietly dominate the mainstream EV market

With regard to electric vehicles (EV), You’re here (TSLA 3.60%) is the big kahuna, selling the majority of electric vehicles in the United States. But it is by no means alone. Plenty of other automakers are getting in on the action.

In Detroit, automakers are finally in the EV space. Ford (F -0.32%) offers the F-150 Lightning, Mustang Mach-E and E-Transit. General Motors (GM 1.95%) sells the Chevrolet Bolt EV and EUV, GMC Hummer and Cadillac Lyriq. The Cadillac Celestiq, Chevrolet Equinox EV, Chevrolet Blazer EV and Chevrolet Silverado EV are all waiting in the wings.

So there is Nissan (NSANY 0.79%)which has lost its lead in electric vehicles, but still sells the affordable Nissan Leaf. volkswagen is doing its best to generate more interest in its ID.4 crossover. The electrified future of Stellantide (STLA 2.60%) – which includes the Chrysler, Dodge, Jeep and Ram brands – is just getting started, its electric vehicles won’t arrive until 2024.

But with a few exceptions, like the Chevrolet Bolt and Nissan Leaf, most electric vehicles are expensive, costing well over the average price of $48,043 paid for a new vehicle in the United States in June, according to Cox Automotive.

Yet even as Chevrolet and other brands are poised to introduce more affordable electric vehicles, Korean automakers hyundai (HYMTF 0.52%) and Kia have quickly dominated the affordable electric vehicle segment, quietly registering a substantial number of sales in the United States this year. Let’s see how they succeed.

The numbers tell the story

A casual look at electric vehicle sales figures can be misleading. Tesla sold 259,700 vehicles in the first two quarters of 2022, with Ford coming second with 22,979. But Kia Motors America ranks third with 17,723 units and affiliate Hyundai ranks fourth with 15,857 units. General Motors ranks fifth with 7,674 vehicles.

But here’s what you might not know. Hyundai Motor Group owns 33.88% of Kia and is its largest shareholder. Hyundai bought the automaker after its bankruptcy in 1997. Together, the Korean pair have 33,323 units in the United States, second only to Tesla. In fact, the Hyundai Ioniq 5, the first model in Hyundai’s new Ioniq EV sub-brand, and the mechanically similar Kia EV6 sold 26,260 units, outselling the scorching Mustang Mach-E by 8,585 units.

Both are built using Hyundai’s E-GMP (Electric-Global Modular Platform) architecture and share similar layouts: a base single-motor model with a 58 kWh battery and a dual-motor model with all-wheel drive with a 77.4 kWh battery.

Even so, the Hyundai and Kia models are not low-cost vehicles; their Manufacturer’s Suggested Retail Prices (MSRP) are, for the most part, north of $40,000. Still, these vehicles are some of the cheapest new electric vehicles you can buy. And while Hyundai will introduce a cheaper Ioniq 3, it’s not expected until 2026, according to Automotive News. But Kia is expected to launch the cheaper EV3 and EV4 in 2024.

Industry logic suggests that by capturing EV buyers now, Hyundai and Kia can build brand loyalty this year and next before competitors enter the market by 2024. But given the low share EV market share (6.1% of sales in July 2022), there is still plenty of room for other automakers to gain market share.

One electric vehicle manufacturer to watch is General Motors. The company plans to expand its electric vehicle lineup with the Chevrolet Equinox EV compact SUV priced “around $30,000,” according to GM. If it qualifies for the $7,500 federal electric vehicle tax credit, its starting price would be less than $23,000. Similarly, the 2023 Chevrolet Bolt EV, with an MSRP starting at $25,600, would cost $18,100 before destination charges, taxes and options. That could make the brand a low-cost leader in the United States, locking in buyers as they move up GM’s product line into more expensive vehicles.

Ultimately, monthly sales results will reveal which company attracts the most entry-level buyers, a key to sustainable growth. That said, Hyundai’s stock is down over the same period, trading at a P/E of around 4.5. That’s not much, even for a stock car. Given Hyundai’s transformation into an EV player and a declining share price this year, interested investors should watch for a bottom before taking the plunge. This stock might have some upside in the future.

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