BYD’s Korea push tests Hyundai at home

BYD is rapidly expanding its presence in South Korea, mounting a direct challenge to Hyundai Motor and Kia in their home market with low-cost, feature-rich electric vehicles and hybrids. Bloomberg Intelligence data indicate that BYD’s EV and hybrid sales in the country jumped ninefold between January and August to almost 18,000 units, while Hyundai’s comparable sales fell 6% to about 139,000. The surge continued into September, when BYD’s registrations reached 20,000, already double its initial target for the full year, based on data from the Korea Automobile & Mobility Association.

This rapid ascent has pushed BYD ahead of Volvo and Toyota in the rankings of foreign carmakers in Korea, a notable shift given that it only entered the passenger car market there in early 2025. BYD’s advance comes despite losing access to South Korean government subsidies in July after failing to meet certain requirements, underscoring the strength of its value proposition for increasingly price-sensitive buyers.

Compelling pricing and equipment levels are central to BYD’s strategy. The BYD Dolphin hatchback starts at 24.5 million won, with discounts bringing purchase prices below 23 million won for some buyers, roughly in line with a subsidized Hyundai Casper Electric that can be bought at about 22 million won in its basic trim in Seoul. Buyers have cited the Dolphin’s features and shorter delivery times as key advantages compared with waiting periods of around two years for certain Hyundai models.

BYD is also broadening its Korean lineup. It is adding the Sealion 6 DM-i plug-in hybrid, priced at 37.5 million won and described as the cheapest in its segment. These offerings complement its broader low-price strategy that has been gaining traction among cost-conscious consumers in Korea.

BYD’s growth is intensifying competitive pressure on Hyundai and Kia, which still command a combined 72% of South Korea’s domestic auto market but are finding it harder to compete with lower-priced, technology-focused Chinese models. An analyst from Samsung Securities has warned that Hyundai’s annual global sales are likely to fall below 4 million units for the first time since 2010, excluding the 2020 pandemic slump, missing a target of 4.16 million units, with Chinese competition identified as the main driver of the slowdown.

Executives at Hyundai have expressed unease over the design and pricing advantages of Chinese brands, highlighting that Chinese vehicles showcased at a recent Paris Motor Show displayed a design and pricing edge.

The accelerating influx of Chinese EVs has prompted concern within South Korea’s auto industry. The Korea Automobile Manufacturers Association has warned that rising penetration of Chinese EVs could lead to the collapse of not just domestic EV makers but the broader auto sector, and has urged parliament to adopt tax incentives and support measures. Lawmakers have responded with a bipartisan bill proposing tax credits covering up to 50% of annual domestic production costs for strategic industries, including electric vehicles.

Regulatory conditions currently offer limited protection for local players. South Korea imposes an 8% import tariff on Chinese passenger cars and in August excluded EVs from a bill granting tax credits to domestic manufacturers, leaving Hyundai and Kia more exposed to low-priced imports. At the same time, analysts note that Chinese brands face headwinds, including sparse service infrastructure, high repair costs and insurance premiums, and rapid depreciation. BYD owners have reported delays in spare parts and repair bills that can exceed 11 million won for minor collisions. In response, BYD plans to expand its South Korean service locations from 20 to 26 by the end of this year, but this still trails the more than 1,200 domestic service centers operated by Hyundai and Kia.