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.

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.

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.

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.

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.”

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.

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.