Kia slashes EV5 forecast as demand wavers

INTENSIFYING demand and cooling growth in the electric car market has prompted Kia to slash the sales forecast for its EV5 mid-sized SUV.

 

Kia had initially planned to sell about 10,000 EV5s per year, which would have made the Chinese-made newcomer the third best-selling electric car in the country, behind the Tesla Model Y and Model 3.

 

But the Korean brand says it’s now aiming for 400 sales per month, or 4800 cars in 2025, the EV5’s first full year on sale.

 

That would slot the five-door five-seater in the mix with a bunch of eagerly-priced electric alternatives, including the BYD Seal, BYD Atto 3 and MG4 making it a lot more popular than the Toyota bZ4X, Subaru Solterra and Ford Mustang Mach-E that are significantly more expensive.

 

“We’ve got to be realistic with the market,” says Damien Meredith, Kia Australia CEO when discussing the changing buyer sentiment towards EVs.

 

“We’ve got to set our sights on selling 400 a month. That’s going to be a challenge within itself.”

Earlier in 2024 Kia said it planned to bring the EV5 to market with a price tag that undercut the Tesla Model Y, which is by far the most popular EV on the market.

 

It managed to do that with an entry-level price for the EV5 Air Standard Range of $56,770 drive away.

 

That compares with $55,900 plus on-road costs for the Tesla, making it around $2000-4000 more expensive, depending on which state or territory you buy it in.

 

For that the EV5 only gets 400km of WLTP driving range between charges, compared with 455km for the Model Y Rear-Wheel Drive.

 

The Air Standard Range ups that range to 555km but costs another $7220.

 

And when it comes to standard equipment the EV5 misses out on many big ticket items that come standard in the Tesla.

 

They include matrix LED headlights, panoramic sunroof, heated rear seats, power adjustable passenger seat and a memory function for the driver’s seat.

 

And, of course, buying a Tesla means you can tap into the entire Tesla charging network.

 

That could partly explain why Meredith doesn’t see the EV5 outselling the Model Y in its early time on the market.

 

“It probably would be difficult to do (outsell Tesla),” he says.

 

And Meredith believes most of the demand for the EV5 - by far the most affordable electric car from Kia - will come from fleets.

 

“Companies and governments are still driving EV purchases,” he says, adding that the company thinks 60 per cent of sales will be by fleets.

 

Clearly one big appeal is the fringe benefits tax exemption on EVs priced below the luxury car tax threshold (currently $91,387).

 

It means those planning to use the EV as a personal vehicle can fund it out of their pre-tax income, saving thousands each year.

 

Dropping the sales forecast for the EV5 creates another potential headache for Kia: meeting the New Vehicle Fuel Efficiency Standards (NVES) that come into play in 2025.

 

While thirsty vehicles can be penalised, those penalties can be offset by vehicles that beat the emissions targets.

 

With the imminent arrival of the Tasman ute it means cars such as the EV5 become even more critical to balancing the numbers.

 

“We don’t want to be paying penalties,” says Meredith of NVES.

 

”We’ve already looked at that (with the revised EV5 numbers) and specifically we’re ok. The first two years we’re fine.”

 

After that - when the NVES targets tighten towards the end of the decade - Meredith is hoping the sentiment towards EVs will have changed.

 

“Hopefully the market changes and if manufacturers use their credits in the right way, hopefully EVs will be cheaper in the marketplace.”

 

He says rather than selling credits the company would plan to use them to improve the affordability of EVs, in turn making it easier to sell vehicles such as the Tasman.

 

For that model - one of the most important in Kia’s history - Meredith says there are no changes.

 

“We believe we can do 20,000 Tasmans (annually).”