Mercedes, BMW, Audi, VW offer deep discounts amid EV phobia in Korea

Imported vehicle dealers in South Korea are offering deep price cuts amid the growing electric vehicle phobia following a Mercedes-Benz EV blaze that caused extensive damage.

According to industry sources on Monday, foreign brand auto dealers are set to offer nearly 30% retail price cuts to woo new car buyers.

Of 30 imported vehicles offering at least 20% discounts, some 22 models, or 73%, are electric cars, according to data from Getcha, a Korean vehicle purchase information provider.

German automaker Audi AG’s e-tron 55 quattro is selling at 82.56 million won ($60,188), a 29.5% discount from its regular price.

The Audi Q8 e-tron Sportback and the e-tron S quattro are also each selling at 29.5% discounts.

The high-performance RS e-tron GT sells at 153.7 million won, a 24.5% discount.

Discount rates for those Audi vehicles were up to 20% last month.

BMW Korea offered no discounts for the i7 xDrive60 in July, but this month it is selling the EV at a 12.7% discount.

The iX xDrive50 Sports Plus is selling at a 12.9% discount price of 135 million won.

Mercedes-Benz is offering a 10% discount to sell the EQE EV at 103.5 million won. Volkswagen will give a 23% discount for the ID.4 to sell it at 54.9 million won.

INFLUENCED BY MERCEDES FIRE

“Imported vehicles usually get higher discounts near the end of the year. But this time, foreign brand dealers are unusually offering sharper discounts even in the summer. Probably, they were influenced by the weakening consumer sentiment toward EVs following the Mercedes blaze,” said an imported vehicle dealer.

The actual purchase price of an imported vehicle is usually determined by the official prices set by the foreign brands’ Korean offices and the discount rates set by their dealers.

If inventories rise amid weak sales, dealers are willing to slash their margins by offering higher discounts.

Some of Volkswagen Korea's contracted flagship ID.4 models were recently canceled.

“Some customers who came to us to buy an electric model ended up switching to an internal combustion engine car,” said a foreign brand dealer in an upmarket district of Seoul.

HYUNDAI, KIA UNDETERMINED YET

Korea’s two largest automakers – Hyundai Motor Co. and Kia Corp. – haven’t yet determined their sales price discounts for next month.

However, Hyundai has launched a promotional event offering a free two-night stay at the Hilton Grand Vacations (HGV) hotel in Hawaii for buyers of the IONIQ 5, IONIQ 6 and Kona Electric until August 2025.

On Sunday, Hyundai revealed on its website a list of manufacturers of the batteries used in 13 of its EV models.

Excluding the Kona Electric, which uses China's Contemporary Amperex Technology Co. Ltd. (CATL) batteries, all Hyundai EVs use battery packs made by LG Energy Solution Ltd. or SK On Co.

Kia followed suit on Monday, making public the list of its battery partners.

Kia's seven EV models, including the EV3, EV6 and EV9, run on LG Energy or SK On batteries. Some latest models of the Ray EV and the compact crossover Niro EV are equipped with CATL batteries.

EV PHOBIA

Foreign brands’ deep price discounts come amid a growing EV phobia in Korea following a series of fires involving electric cars.

Earlier this month, a Mercedes-Benz EQE electric sedan with batteries made by Chinese company Farasis Energy caught fire in the underground garage of an apartment building in the Korean city of Incheon.

The blaze took over eight hours to extinguish and damaged about 140 cars. Some 23 people were hospitalized due to smoke inhalation, police said.

According to a recent survey by The Korea Economic Daily and global research firm EV Volumes, a division of J.D. Power, out of 58 electric vehicle models driving on the streets of Korea, 22 models are equipped with Chinese batteries.

The survey also showed that of 40 imported EV models, nearly half or 18 of the models sit on Chinese batteries.

Mercedes-Benz, among the top foreign brands in Korea, uses Chinese batteries for six of its seven EV models sold in the country, accounting for 85.7% of its Korean sales.

Industry officials said Korean authorities are expected to unveil new measures early next month to allay public concerns about safety in a sector already suffering a sales slowdown.

Write to Jae-Fu Kim and Jin-Won Kim at hu@hankyung.com

In-Soo Nam edited this article.