While plug-in hybrid electric vehicles (PHEVs) are rapidly emerging as an alternative to fill the slowing demand for pure battery electric vehicles in the global auto market, South Korea is uniquely isolated from this trend. As domestic automakers have effectively withdrawn from the PHEV market, a clear reversal is taking hold, with both domestic sales and exports collapsing simultaneously.
According to industry data on the 11th, domestic PHEV sales in the first half of this year totaled 5,852 units, a 19.7% decrease from 7,287 units in the same period last year. PHEVs accounted for 1.7% of total new car sales last year, but that figure shrank to just 1.2% in the first half of this year. This effectively shows that PHEVs are fading from consumer choice in the domestic market.
The export indicators are even more severe. PHEV exports in the first half of the year stood at 11,649 units, a sharp 64.5% plunge compared to 32,815 units a year earlier. The share of PHEVs in total vehicle exports shrank from 7.8% to 2.2% in just one year. Last year alone, 50,729 units were exported, accounting for 5.8% of the total, but forecasts suggest maintaining even the 2% range will be difficult this year.
South Korea’s sluggish performance stands in stark contrast to the boom in the global market. According to the European Automobile Manufacturers’ Association (ACEA), new PHEV registrations in the 27 EU member states reached 577,735 units in the first half of the year, capturing 9.8% of the total new car market. This is a 1.3 percentage point increase from 8.5% in the same period last year. By country, Italy recorded an explosive sales growth rate of 84.3%, with other major markets such as Spain (39.0%) and Germany (17.9%) also showing steady growth.
China’s presence is also formidable. Accounting for more than half of the global PHEV market, China sees high consumer preference not only for pure EVs but also for PHEVs. Market research firms estimate that PHEVs hold roughly a 6% share of China’s overall finished vehicle market.
The neglect of PHEVs by South Korean automakers is structural. Hyundai Motor and Kia have not sold PHEV models domestically since 2022. The PHEV volume produced at their domestic plants is entirely exported overseas and is not supplied to South Korean consumers. Analysts point to a lack of price competitiveness as the reason, stemming from the South Korean government’s near-total absence of policy support for PHEVs, unlike major European countries and China, which offer subsidies for PHEVs comparable to those for battery electric vehicles.
Hyundai Motor and Kia are focusing on a two-track strategy of pure EVs and hybrids (HEVs), showing greater interest in extended-range electric vehicles (EREVs) as an alternative to PHEVs. GM Korea, KG Mobility, and Renault Korea also do not produce PHEV models, meaning there is currently not a single domestically produced PHEV model on sale in the South Korean market.
The void left by domestic automakers is being rapidly filled by imported brands. BMW, Mercedes-Benz, Volvo, and Lexus are steadily maintaining their premium PHEV lineups to target the niche market. Recently, China’s BYD entered the fray with a price-disruption strategy. BYD launched the ‘Sealion 6 DM-i,’ a mid-size sport utility vehicle (SUV) equipped with its proprietary PHEV technology, at a price of 37.5 million won (approximately $26,466). It is unusual for a PHEV model to be supplied in the 30 million won range, and attention is focused on whether it can lift South Korea’s PHEV market share from the low 1% range.
The collapse of South Korea’s PHEV market also runs counter to the strategic direction of the global automotive industry. As the EV market enters a recovery phase after passing through a chasm, major players are intensifying efforts to enhance profitability and brand value through flagship EVs. New EV registrations in South Korea reached 198,509 units this year, a 113.6% increase year-on-year, with the proportion of electrified powertrains surpassing half for the first time at 57.8%. Amid this trend, PHEVs are evaluated as an important intermediate step in the electrification transition, but in the South Korean market alone, this link appears to be completely severed.