Japan's Toyota and China's BYD have moved to target the Korean market by pushing "plug-in hybrid (PHEV)" models. A PHEV is a hybrid vehicle that can be charged externally, offering longer range than an electric vehicle while easing charging concerns. With virtually no domestic models in Korea's PHEV market, imported brands are moving to seize this "niche market."
However, given the characteristics of the Korean market, such as its small land area, Hyundai Motor Group has judged that the advantages of PHEVs are not significant and has not expanded its lineup. Some also say that unless price competitiveness is secured, it will be difficult for foreign brands to dramatically increase PHEV sales.
According to the auto industry on the 23rd, Toyota Korea officially launched the fully redesigned model of its flagship sport utility vehicle (SUV), the RAV4, on the 16th. The previous model's trims consisted of two hybrids (HEV) and one PHEV, and this time a high-performance PHEV trim has been added.
The "All-new RAV4" PHEV can travel up to 77 km on electricity alone on a single charge, and it takes 35 minutes to raise the battery from 10% to 80%. Fuel economy is 15.3 km per liter. A Toyota Korea official said, "Thirty percent of preorders are PHEVs."
BYD also plans to unveil the Sealion 6 DM-i, which applies its in-house PHEV technology, DM-i, at the 2026 Busan Mobility Show opening on the 26th. As an EV-based PHEV, it is designed so that the electric motor operates for more than 80% of total driving, delivering a driving experience close to that of an electric vehicle.
This model also runs more than 70 km on electricity alone, and 30 minutes is enough to charge the battery from 30% to 80%. A BYD Korea official predicted, "(PHEV) sales will be about three times those of electric vehicles."
Toyota and BYD have put PHEVs at the forefront in Korea because the domestic PHEV lineup is effectively a "void." A Toyota Korea official said, "Because local companies have not released PHEV models, the domestic PHEV market is very small."
Hyundai Motor and Kia, which account for more than 90% of the domestic market for Korean-made cars, currently do not sell PHEVs in Korea. Even looking globally, PHEV sales by Hyundai Motor and Kia account for less than 1% of their total eco-friendly vehicles (as of May).
According to the Kaizuyu Data Research Institute, as a result, domestic PHEV sales from January to May this year totaled 4,745 units, down 26% from a year earlier. Their share of the overall market is just 0.8%, and 3.3% in the imported car market.
Hyundai Motor Group, instead of emphasizing PHEVs among eco-friendly vehicles, is focusing on hybrids that do not require charging and on pure electric vehicles. Analysts say this is a strategy tailored to the characteristics of the Korean market.
Lee Hang-gu, a special professor at Pyeongtaek University, said, "To travel long distances on electricity with a PHEV, you need to charge it daily. Overseas, where there are many houses, charging is easier, but Korea's apartment-centered lifestyle is different," and added, "If consumers are willing to endure the inconvenience of charging, they are more likely to ultimately settle on pure electric vehicles, which also offer subsidies, so it makes sense to focus on pure EVs and other models that can be sold in larger volumes."
In addition, there is the factor that Korea is not well-suited for the PHEV's biggest advantage, "long-distance driving." PHEVs can travel hundreds of kilometers by combining an electric motor and an engine, but in Korea, with its small territory, this advantage is hard to highlight.
Europe and China, where PHEV sales are high, are either connected to neighboring countries or have large national territories. With strong demand for long-distance travel, a PHEV market can form that allows driving without anxiety about charging or worries about fuel economy.
However, as PHEV sales surge in Europe, there are concerns that the lack of a PHEV strategy could become an obstacle to targeting the global market going forward. Still, the domestic auto industry sees no need to rush to increase PHEVs.
In Europe, brands that sell many internal combustion engine cars need to include fuel-efficient models such as PHEVs in their lineups to comply with carbon emission regulations. In effect, PHEV sales also serve as a kind of "regulatory response." Hyundai Motor Group is putting its weight behind electric vehicles in the European market.
Lee Ho-jung, head of the Industry Research Office at the Korea Automobile Research Institute, said, "If electric vehicles sell well, the value of PHEVs is not high," adding, "PHEVs are for meeting regulations, a transitional vehicle before moving to EVs."
In April, PHEV sales by Chinese brands in Europe jumped 236%, but his analysis is that this is also largely due to regulation. Lee said, "As Chinese corporations aggressively export PHEVs to Europe instead of EVs, which face tariffs, sales are rising for now." The EU is reportedly considering imposing tariffs on Chinese PHEVs as well.
Some say Hyundai Motor Group's PHEV technology is somewhat lacking because it moved directly from hybrids to pure electric vehicles. However, that does not mean Hyundai Motor Group lacks PHEV technology.
Hyundai Motor Group currently sells PHEV models of the Hyundai Motor Tucson and Santa Fe, and the Kia Niro, Sportage, and Sorento in overseas markets. In Korea as well, it previously sold PHEV models of the Sonata, Ioniq, and K5, but they were discontinued when subsidies of around 5 million won per vehicle were abolished in 2021.
Experts point to "price" as the essential condition for expanding the domestic PHEV market. An auto industry official said, "For consumers to choose a PHEV, it must deliver a tangible benefit, and to achieve that, prices need to be as affordable as hybrids."
PHEVs are generally more expensive than hybrid models. As BYD has said it will set a competitive price, the industry expects it will launch a PHEV model in the second half in the high-30 million won to low-40 million won range.