Hyundai and Kia are now Tesla’s biggest competitors in the US (2024)
In the intense competition to dominate the US electric vehicle (EV) market, South Korean automotive brands Hyundai and Kia have emerged as Tesla’s most formidable competitors.
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Over the past year, these influential players, both integral parts of the Hyundai Motor Group conglomerate, together secured the second position in US EV sales, closely trailing industry leader Tesla, according to sales data provided by S&P Global. Although Tesla currently holds a 55% market lead, analysts expect Hyundai and Kia’s aggressive expansion plans to pose a growing challenge.
Despite Tesla’s market dominance, Hyundai and Kia are strengthening their market presence by introducing new EV models and implementing competitive pricing strategies. Demonstrating a commitment to American EV production, Hyundai Motor America announced a $7,500 cash bonus for buyers of its electric vehicles this week, applicable to three flagship EV models.
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This incentive program positions Hyundai, once perceived as an underdog in the US automotive industry for producing budget-friendly vehicles criticized for their aesthetics and quality concerns, as a proactive player prepared to challenge established norms.
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In 2023, Hyundai and Kia collectively sold 69,259 battery-powered vehicles in the US, helping cut Tesla’s 2022 65% dominance by 10%. Together, Hyundai, its luxury subsidiary Genesis, and Kia offer a total of nine electric models, contributing 7.5% of electric car sales in the US. Hyundai’s executives, who target a 12% global market share by 2030, said they witnessed high demand for their EVs last November. The company plans to invest $85 billion in EV production by 2030.
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According to auto data firm Motor Intelligence, Hyundai dethroned General Motors from the second spot in US EV sales last July, raising its sales volumes by 11%. S&P Global place GM’s Chevrolet brand third at 5.9% in last year’s rankings, while Ford holds a 5.5% share.
Tesla’s high pricing gives Hyundai an edge
Hyundai’s electric vehicle lineup ranges from the $32,000 Hyundai Kona to the Kia EV9, a spacious seven-seater SUV priced at $55,000, appealing particularly to buyers with families. In contrast, Tesla, despite its recent run of aggressive price cuts in Europe and China, offers five distinct models, with the most affordable one in the US priced at approximately $39,000. Tesla drivers this week complained of low battery performance in Chicago’s cold weather. Last year, Hyundai unveiled a new battery technology that it said gives its EVs better electric performance and “provides 800V ultra-fast charging as standard with up to 351 kms of range in just 15 minutes.”
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Inspired by the introduction of Tesla’s Model 3, Hyundai and Kia announced in 2017 their plans to unveil a range of electric vehicles created entirely from the ground up. This strategic decision provided them with an early advantage, enabling them to outpace numerous well-established automakers in bringing purpose-built electric car designs to the market. But Hyundai’s first EV sedan was unveiled in 2022. Its designs not only deliver superior performance but also enhance overall profitability.
With upcoming EV models and a well-defined pricing strategy, Hyundai and Kia are poised for an even more robust performance in the future, with plans underway to build a $7.6 billion EV plant in Georgia that can produce 300,000 cars each year.
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However, Hyundai is gaining a bigger market share just when EV buyer interest in the US is diminishing, a slowdown—observed in the second half of last year—that has been linked to the comparatively high prices of electric models. Hyundai will have a tough balancing act as it attempts to close the wide market share gap with Tesla in the US.
In 2023, Hyundai and Kia collectively sold 69,259 battery-powered vehicles in the US, helping cut Tesla's 2022 65% dominance by 10%. Together, Hyundai, its luxury subsidiary Genesis, and Kia offer a total of nine electric models, contributing 7.5% of electric car sales in the US.
As the electric-vehicle race heats up, a pair of Korean automakers are pulling ahead of larger rivals in the U.S. to emerge as Tesla's biggest competition. Hyundai Motor and affiliate Kia jointly captured the No.2 slot last year in U.S. electric-vehicle sales, trailing only Tesla, which still holds a commanding lead.
Tesla is not only the biggest company in the EV space, it is the biggest car maker in the world, traditional or electric—not to mention one of the ten largest public companies on the planet by market capitalization.
Tata Motors Ltd.: The Indian automaker is the country's electric vehicle market leader, at a 72 percent market share, and sold 34,000 EVs in the first half of 2023. The company's popular models are the Tata Tiago, Tata Nexon, and Tata Tigor.
Tesla has distinguished itself in the dynamic electric vehicle market by capitalizing on its cutting-edge technology, better battery capabilities, efficient production methods, extensive charging infrastructure, and powerful brand.
China's BYD (BYDDY) is Tesla's biggest rival worldwide. The company delivered over 911,000 EVs in 2022, compared with Tesla's 1.31 million deliveries for the year.
Although Tesla's market share has been falling, the electric carmaker still dominates the market. According to Experian Automotive, the Tesla Model Y was the best-selling electric car in the fourth quarter of 2023, making up 31.9% of new EVs sold. The Model 3 was second with 17.6%. The Volkswagen ID.
BYD overtook Tesla as the best-selling electric vehicle brand in 2022 and maintained its position in the ranking through 2023. That year, BYD sold nearly 2.88 million plug-in electric vehicles globally. Tesla and BMW completed the top three brands that year, with Tesla reporting some 1.81 million sales.
As of December 2023, China had the largest stock of highway legal plug-in passenger cars with 20.4 million units, almost half of the global fleet in use.
China accounted for 61% of the global BEV sales, followed by the US. BYD Auto became the best-selling BEV brand in Q4 2023 by surpassing Tesla. Tesla's Model Y, BYD's Yuan Plus (Atto 3) and Tesla's Model 3 were the best-selling EV models in Q4 2023.
The short answer to the question, IMO, is “major Auto players have been slow to compete with Tesla because it didn't make any financial sense”: you may want to spin it the way you like, but the bottom line is that EV have not been profitable and the global EV market was very small.
The rivalry between competitors in the electric vehicle market is beginning to intensify. Established car manufacturers like Volkswagen, Toyota, and Ford are developing and selling electric vehicles. Several new companies are also competing in the market, such as Rivian and Lucid.
Tesla rival Rivian faced a make-or-break moment this week as it unveiled its latest model, the R2 SUV. Judging by its soaring shares, things went well. Since the Thursday event, the market value of the Amazon-backed electric-vehicle maker has jumped by more than $1.7 billion.
Kia and Hyundai Motor Group operate independently, but Hyundai is the parent company of Kia Motors. The difference between Kia and Hyundai is that both companies have their own brand philosophies to uniquely produce their vehicles. As you can see, they are related but not the same!
BMW was one of the few companies selling electric vehicles to report a surge of growth in the first quarter of 2024, even as rivals like Tesla and Volkswagen struggled.
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