In January, Tesla Inc. experienced a significant decline in sales in South Korea, as the company sold only one electric vehicle (EV), marking its worst month since July 2022 when no vehicles were sold at all. This decline in demand can be attributed to several factors, including safety concerns, pricing, and a lack of charging infrastructure.
According to data from Carisyou, a Seoul-based researcher, and the Korean trade ministry, the number of new EVs registered in Korea across all carmakers fell by 80% in January compared to December. This slowdown in enthusiasm for EVs can be attributed to higher interest rates and inflation, which have prompted consumers to curb their spending. Additionally, concerns about battery fires and a lack of fast chargers have also dampened demand.
For Tesla, the drop in sales in January is significant as its China-made Model Y was one of the top-selling EVs in Korea last year. However, many early adopters have already purchased EVs, and mass-market consumers may not be ready to make the switch yet, according to Lee Hang-Koo, head of the Jeonbuk Institute of Automotive Convergence Technology. Tesla’s association with China has also hurt its popularity, as some consumers have concerns about the quality of manufacturing and prefer non-Chinese-made vehicles.
Seasonal swings in demand also affect EV sales in Korea, with Lee noting that many people prefer to wait for the government’s announcement of subsidies before buying a vehicle in January.
Tesla also faces challenges related to subsidies in Korea. In July 2023, the selling price of the Chinese-made Model Y was set just below the threshold that qualifies cars for a full government subsidy. However, in the 2024 plan announced recently, the threshold has been further lowered, resulting in a reduced subsidy for Tesla’s Model Y.
In response to the decline in sales, Tesla’s spokesperson in Korea stated that consumers delayed their EV purchases until the confirmation of subsidies.
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