Domestic Automakers Re-enter PHEV Market After 10 Years Amid Chinese Price Competition

Domestic automakers are set to re-enter the plug-in hybrid electric vehicle (PHEV) market for the first time in over a decade. With PHEVs having had a minimal presence in the domestic market, mid-sized manufacturers are planning to target this niche segment. The challenge lies in proving the value of their offerings to consumers, especially as Chinese brands have begun aggressive pricing strategies.

According to industry sources, General Motors (GM) Korea plans to officially launch sales of the PHEV 'Electra E7' as early as this month. This model, introduced under the luxury brand 'Buick' in September, has recently completed domestic certification procedures after about a month of pre-orders.

The Electra E7 is garnering attention as it marks the first PHEV release from a domestic automaker in nearly ten years. The last new PHEV model from the five major domestic manufacturers (Hyundai Motor, Kia, GM Korea, Renault Korea, and KG Mobility) was Kia's Niro PHEV, launched in May 2017.

The halt in PHEV sales was primarily due to limited demand. Domestic PHEV sales peaked at 19,701 units in 2021 but have declined for three consecutive years, dropping to 9,174 units in 2024. However, last year's sales rebounded slightly to 13,619 units, prompting the industry to reintroduce new models into the domestic market.

Mid-sized automakers, facing shrinking market shares, are looking to PHEVs as a potential breakthrough. KG Mobility is set to unveil the 'SE10,' a mid-sized SUV developed in collaboration with China's Chery Automobile, in January. While the SE10 will also offer gasoline models, the focus in South Korea will be on the PHEV variant.

Pricing poses a significant challenge. Chinese manufacturer BYD has already initiated a low-cost strategy in the PHEV sector. At the Busan Mobility Show in June, BYD introduced the mid-sized SUV 'Sea Lion 6 DM-i,' entering the South Korean PHEV market with an eye-catching price of 37.5 million won.

PHEVs typically require a larger battery and external charging equipment compared to standard hybrids (HEVs), resulting in higher prices. This has been a barrier to the widespread adoption of PHEVs, but BYD's aggressive pricing strategy has lowered the entry threshold for consumers.

Since its customer deliveries began in August, the Sea Lion 6 DM-i has ranked first in new registrations among imported PHEV models for three consecutive months, with over 1,000 units delivered by early this month.

As a result, domestic automakers face the pressure of demonstrating competitive product value and service quality to justify price differences from BYD right from the market entry phase. The Electra E7 is expected to be priced between 43 million and 54 million won, while the SE10 is projected to start at around 40 million won. An industry insider noted, "Due to parts costs, it is realistically difficult to price below 30 million won, but the market expansion driven by Chinese competitors is a positive factor."