$56,770 Kia EV5 Air “basically break-even”

KIA is hoping plenty of people are tempted to splash out on the panoramic sunroof and Harman Kardon sound system of the GT-Line version of its EV5 electric SUV - all in the name of profitability.

 

Despite the Tesla-beating price tag of the entry-level EV5 Air, Kia Australia CEO Damien Meredith has revealed it’s not a great money spinner.

 

The local head of the Korean brand says slim margins mean the entry-level EV5 Air – priced from $56,770 drive-away – is “basically break-even”.

 

In other words, it covers its cost, but the car that slides under the hot-selling Tesla Model Y rear-wheel drive by up to $4000 (depending on which state/territory you buy it in) will not be a big contributor to the Kia staff Christmas party.

 

“The base car is basically a break-even proposition,” says Meredith.

 

Kia is expecting roughly one third of buyers to opt for the most affordable Air, another third to go for the mid-grade Earth and the remaining third to snap up the range-topping GT-Line.

 

Whereas the Air sells from $56,770 drive away, the Earth is $68,990 and the GT-Line $75,990 (buyers in WA pay $1000 more for Air and Earth models and $2000 for a GT-Line).

 

Meredith says those better specified models - each of which has the larger 88.1kWh battery and two electric motors - are crucial to the profitability of the EV5.

 

“If it was 80 (per cent Air), 10 (per cent Earth), 10 (per cent GT-Line) we’d have a problem,” Meredith said of the EV5’s model mix.

 

But Meredith believes buyers will see value in the more expensive models, which get extra features such as a powered tailgate and, for the GT-Line, a sunroof and 360-degree camera.

 

“Historically - whether it’s been ICE, hybrid or EVs - we’re rich in (model) mix,” said Meredith.

 

He added that the margins on the EV5 Air are slimmer than any he’s seen in his 10-year tenure at Kia.

 

“Not in my memory (has there been a car with such a low margin),” he said when asked about how it compares with other models from Kia over the years.

 

That in itself is a remarkable admission from a brand that has sold some of Australia’s most affordable cars; they’re the sorts of models that typically have slim margins.

 

But Meredith says we are in “strange times with EVs”.

 

“The market is pushing back,” he said, saying it was crucial to make the cars appealing to buyers from the moment they launch rather than lower prices as Ford, Subaru, Tesla, MG and others have done.

 

“You’ve just got to be competitive.”

 

That’s arguably more important with the imminent introduction of the New Vehicle Efficiency Standards, which are due to come into force in 2025.

 

Selling more EVs can allow car makers to offset the zero emissions from electric cars avoid potential penalties on thirstier vehicles.

 

For Kia those thirstier models could include the Tasman ute that is due in 2025.

 

Kia says it wants to sell 20,000 Tasmans each year.