[Exclusive] Domestic Compact Electric Sedan to Launch Next Year

Kia Labor and Management Agree on 2024 CT Mass Production
First Domestic Electric Vehicle Model the Size of Avante
Increased Competition Among Affordable Models Like Tesla Model 3 and Model 2

Kia plans to launch a compact midsize electric sedan as early as next year. Due to the design characteristics of electric vehicles, many are released in the form of sport utility vehicles (SUVs) or crossovers. As the adoption of electric vehicles increases, it is expected that more people will seek economical and efficient vehicle classes, which is interpreted as an intention to respond to this demand.

According to a comprehensive report from our coverage on the 24th, Kia's labor and management recently reached a broad agreement on the production plan for follow-up vehicles at the Employment Stability Committee meeting. Notably, two electric vehicles (project names SV and CT) are scheduled to be produced at the Gwangmyeong plant next year. The CT is a compact midsize sedan. Vehicles about the size of the company's K3 or Hyundai's Avante fall into the compact midsize category. Currently, there is no compact midsize model in Hyundai and Kia's dedicated electric vehicle lineup. The SV is an electric vehicle the size of a midsize SUV. Industry insiders expect it to be larger than the currently sold EV6 but smaller than the EV9, which is set to launch this year.

Tesla Model 3 at an exhibition hall in China. It is considered a key vehicle in accelerating the spread of electric cars.

Electric vehicles typically place large and heavy battery packs under the vehicle body. Therefore, many take the form of SUVs with a certain height. Among domestic cars, Hyundai's Ioniq 6, released in the second half of last year, was the first dedicated electric sedan. The Ioniq 6 is classified as midsize. Among foreign brands launched domestically, sedans include the Tesla Model 3, BMW i4, and Mercedes-Benz EQE. The Tesla Model 3 is recognized as a key vehicle that has played an important role in rapidly expanding the global electric vehicle market over the past two to three years.

Although SUV demand has increased in major markets worldwide, compact midsize sedans continue to sell steadily. They are often chosen as first cars by students or young professionals or as second cars for easy urban driving. In Europe, small vehicles below the compact midsize class are still in high demand. They also sell well in developing countries with lower income levels.

As electric vehicle adoption accelerates, the industry expects more consumers to seek smaller sedan models. Tesla is also expected to reveal detailed information about the smaller and cheaper Model 2 at an investor presentation early next month. Various Chinese electric vehicle manufacturers, including BYD, have already released or are about to release low-cost models.

Dedicated electric vehicle EV6 produced at Kia Hwaseong Plant

Kia's Gwangmyeong plant will begin mass production of the large midsize electric SUV EV9 this year. From 2025, the Gwangju plant will produce SUV models (project name OV), and the Hwaseong plant will complete a dedicated electric vehicle factory to manufacture purpose-built vehicles (PBVs). The Kia labor union has continuously demanded that the company introduce electrified models, including electric vehicles, at major domestic plants in line with the transition to future vehicles. Currently, among Kia's domestic plants, Hwaseong is responsible for most passenger electric vehicle demand by producing the EV6 and Niro electric vehicles, but going forward, production volumes will be more evenly distributed across plants.

The labor and management have also agreed to jointly promote the production of modules, which were previously supplied by first-tier suppliers, directly at each vehicle assembly plant. Powertrains (engines and transmissions), considered core components of internal combustion engine vehicles, are produced directly at assembly plants. In contrast, electric vehicle drive components such as motors and batteries have been received as modules from external suppliers. The labor union has demanded in-house production of drive units, fearing that continued outsourcing could lead to long-term employment reductions.

Additionally, they agreed to promote KD (knock-down) operations?exporting vehicles in semi-assembled states for final assembly locally?mainly targeting emerging markets, and to jointly consider the hydrogen fuel cell vehicle business, currently conducted only by affiliate Hyundai Motor Company, in the mid to long term.