Kia: Toyota hybrids are ravaging the local EV market

Toyota’s success in spruiking petrol-electric hybrids in Australia has forced Kia to slash the sales forecast of its new EV5 electric SUV by more than 50 per cent.

Kia Australia CEO Damien Meredith told media last week that private buyer interest was sagging in the EV market, with Toyota being a key culprit.

“Toyota has done a fantastic job in growing that hybrid sector,” he said. “People don’t want to jump from ICE (internal combustion engine) to EV.”

Early in 2024 Kia Australia forecast 10,000 sales per year for the EV5, but has now cut that back to 4800, despite it shaping up as the most compelling rival yet for the best-selling Tesla Model Y.

Tesla has sold 16,697 Model Ys so far in 2024, which gives you an idea how modest Kia’s revised EV5 targets are now, however the Model Y’s tally was down 28.8 per cent year-on-year – as of September 30 – despite overall EV sales being up 6.4 per cent.

That said, the current EV sales trajectory suggests sales may finish 2024 below the 2023 total of 87,217 units, unless there’s a kick in the final quarter of the year.

By contrast, hybrid sales are up 87 per cent in 2024 to 129,895, with Toyota accounting for 88,919 of them.

Plug-in hybrids (PHEVs) have grown 120.5 per cent year-on-year, albeit off a low base.

“Look, it’s challenging,” Meredith said when asked to give his appraisal of the EV market.

“We have to look at how we re-ignite the private sector with EV sales.

“Fleet and government are obviously still strong in that area. Big corporates are making statements and still being strong, but the private market itself is still very, very tough.”

Kia is being ultra-cautious with its EV5 forecast despite pricing it under the equivalent Model Y.

The entry-level Air is being offered with the choice of two battery packs (64.2kWh, 88.1kWh), the larger unit being the default offering in the better-equipped Earth and GT-Line.

“We are expecting to sell 400 per month, we believe the split will be 60:40 in favour of fleet and in the initial stages [the sales split] will be a third, a third, a third; Air, Earth and GT-Line,” Meredith predicted.

He added there were a number of issues driving the downturn in private interest in EVs but was clear about what he regarded as the most important factor.

“I think private buyers are quite happy to go ICE, hybrid and then look at EV and that’s the issue,” he said.

“There are other aspects to that obviously; there is infrastructure, there is range anxiety, etc. But I think the main component is people don’t want to go A to C they want to go A, B, C.”

Meredith made it clear both Kia Australia and its dealers had taken a financial hit to price the base EV5 Air Standard Range at $56,770 drive-away, delivering an on-the-road advantage over the Model Y Rear Wheel drive of at least $2000.

“There were a lot of reasons we did that, one is we talked to the dealer network in regards to getting a price where they think it was going to have a lot of punch,” he said.

“We worked out how we could do that. We give a little bit, they give a little bit and the normality [of dealer margin] occurs with the pricing of the other EV5 models.”

Meredith said cut-throat entry-level Air pricing would be maintained throughout the lifecycle of the model.

The EV5 range is built in China and employs LFP battery chemistry rather than NMC. Both moves have helped Kia achieve cheaper pricing than if the vehicle was built in Korea.

The EV5 was originally scheduled to go on-sale mid-year but it was delayed because of wheel balance and steering software issues.

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