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Kia mulls lowering EV prices

Korean automaker logs record quarterly earnings again

By Kan Hyeong-woo

Published : July 27, 2023 - 18:16

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The Kia concept EV5 (Hyundai Motor Group) The Kia concept EV5 (Hyundai Motor Group)

Kia will consider lowering the prices of its battery-powered electric vehicles to compete against global EV leaders amid growing markets, according to the automaker’s chief financial officer on Thursday.

“The important point from now on regarding the EV market, which has become highly competitive and abnormal in some sense, is that we should put more weight on securing our market share than focusing on profitability,” said Joo Woo-jeong, Kia’s CFO and executive vice president, in a conference call announcing the firm’s second-quarter earnings.

“If needed, we may have to give way to lowering prices. We are internally contemplating on (the degree of a price cut) and how we would go about it.”

Joo explained that Kia’s countermeasures to competitors lowering EV prices will take shape starting next year, with new EVs slated to be rolled out. Following the launches of the EV6, a compact crossover sports utility vehicle, and the EV9, a three-row large SUV, Kia is expected to have an EV lineup of 15 models by 2027.

“The most important thing is that we take away the competitiveness in raw costs and (product differentiation) based on technology,” he said.

“Releasing the EV9 and EV5 this year, we have a strong point in that we will launch a C-SUV and a sedan next year to set up a full lineup. So we have a competitive edge over other brands who have to face price competition with a few models.”

Kia, Hyundai Motor Company’s sister firm, earlier announced that the automaker logged record revenue, operating profit and operating profit margin in the second quarter on continuous demand, expansion of supply based on manufacturing normalization and improved profit structure.

According to the company, Kia’s revenue from April to June this year reached 26.2 trillion won ($20.5 billion), up 20 percent on-year. The automaker logged 3.4 trillion won in operating profit, a 52.3 percent increase on year while posting an operating profit margin of 13 percent.

As for the second-half forecast, Kia said despite the uncertainties stemming from the prolonged tension at the international level and the trends of high-interest rates and high prices, it will continue to push for profit expansion by bolstering sales based on increased supply and improving sales mix centered around high-profit vehicles.

Kia said it will also begin selling the EV9 in the US and European regions in the fourth quarter as it looks to secure its footing as a leader in the movement to transform into automation. The company added that it plans to launch the EV6 and EV5 in the Chinese market this year.

As the automaker exceeded market expectations with its first-half earnings so far this year, the company upped its yearly earnings guidance. Kia said its annual revenue is projected to surpass 100 trillion won, while its operating profit will log between 11.5 trillion won and 12 trillion won. It projects the operating profit margin to be between 11.5 to 12 percent.