Hyundai Halts EV Production in South Korea Amid Slow Demand and U.S. Tariffs

On April 17, 2025, 路透社 reported a significant shift in Hyundai Motor’s electric vehicle (EV) strategy, citing South Korea’s Yonhap news agency. Hyundai Motor (005380.KS) plans to temporarily suspend production of some EVs at its Ulsan complex due to sluggish demand and newly imposed U.S. tariffs on imported vehicles. This decision, set to impact production lines for the Ioniq 5 and Kona Electric from April 24–30, reflects broader challenges facing the global EV market as government subsidies wane and trade barriers intensify. For EVXL readers—EV owners and enthusiasts—this development signals potential ripple effects on pricing, availability, and the pace of EV adoption worldwide.

Hyundai’s Production Pause: What We Know

Hyundai’s Ulsan complex, a key manufacturing hub in South Korea, will halt operations on select EV production lines for a week, according to Yonhap, which cited unnamed industry sources. The affected models include the Ioniq 5, a popular electric crossover, and the Kona Electric, a compact SUV. Both vehicles have been cornerstone offerings in Hyundai’s push to expand its EV lineup globally.

Yonhap reported that the suspension stems from a sharp decline in EV orders in major markets, exacerbated by the removal of government EV subsidies and new U.S. tariffs. “The suspension comes as EV orders from major markets have fallen sharply in April following the removal of government EV subsidies and U.S. tariffs on imported vehicles,” Yonhap stated. Hyundai Motor was not immediately available for comment outside regular business hours, leaving some details unconfirmed by the company itself.

The timing of this pause aligns with a broader slowdown in EV demand. In South Korea, EV sales growth has decelerated as government incentives, once a major driver of adoption, have been scaled back. Globally, the EV market faces similar headwinds, with consumer hesitancy growing amid concerns over charging infrastructure, battery range, and upfront costs.

U.S. Tariffs Add Pressure on Hyundai’s EV Strategy

A significant factor in Hyundai’s decision is the U.S. government’s recent imposition of a 25% tariff on imported cars and light trucks, announced by the Trump administration in April 2025. This tariff directly impacts Hyundai, which exports a substantial portion of its South Korean-made EVs to the U.S. market. The Ioniq 5, for instance, has been a strong seller in the U.S., where it qualifies for federal tax credits when leased but faces competitive pricing pressures.

Hyundai’s response to the tariffs shows a calculated approach to mitigate financial strain. The company has committed to maintaining sticker prices on its current EV models for the next two months, aiming to “ease customer concerns that the fallout from tariffs will impact dealer lots,” according to Yonhap. However, this strategy may compress profit margins, especially if demand continues to soften.

Hyundai’s broader U.S. strategy also comes into focus here. In March 2025, the South Korean auto group announced a $21 billion investment in the U.S., part of a long-term plan to localize production and reduce reliance on imports. This includes the construction of a new EV and battery manufacturing plant in Georgia, known as the Hyundai Motor Group Metaplant America, which began production in late 2024. While this facility will eventually produce models like the Ioniq 5 for the U.S. market, the tariff’s immediate impact on imported vehicles has forced Hyundai to adjust its short-term operations.

Market Implications: A Global EV Slowdown?

Hyundai’s production halt underscores a critical juncture for the EV industry. In South Korea, EV sales growth slowed to 7% in 2024, down from 22% in 2023, according to data from the Korea Automobile Manufacturers Association (KAMA). This mirrors trends in other major markets like the European Union, where EV sales growth dropped to 5% in 2024 amid subsidy cuts, per the European Automobile Manufacturers’ Association (ACEA).

The U.S. tariff, meanwhile, adds a geopolitical dimension to the EV market’s challenges. At 25%, the tariff increases the cost of a $40,000 imported EV by $10,000, a burden that either manufacturers or consumers must absorb. For Hyundai, which sold 48,000 Ioniq 5 units in the U.S. in 2024 (based on company sales reports), this could translate to a $480 million cost increase if prices remain unchanged.

Competitors like Tesla, which produces most of its vehicles domestically in the U.S., are less affected by the tariff. This disparity could shift market dynamics, giving U.S.-based manufacturers a pricing advantage while pushing foreign automakers like Hyundai to accelerate localization efforts. However, Hyundai’s Georgia plant won’t reach full capacity until 2026, leaving the company exposed to tariff-related pressures in the interim.

Regulatory and Consumer Considerations

The removal of EV subsidies in South Korea and other markets highlights a broader policy shift. Governments worldwide are reevaluating EV incentives as adoption rates climb and budget constraints grow. In South Korea, the government phased out its EV purchase rebate program in early 2025, which previously offered up to 5 million KRW (approximately $3,700 USD) per vehicle. This move, while fiscally prudent, has dampened consumer enthusiasm, particularly among price-sensitive buyers.

For U.S. consumers, the tariff complicates the affordability of foreign-made EVs. The Ioniq 5, with a starting price of $41,650 in the U.S. (as of early 2025), remains competitive against rivals like the Tesla Model Y ($44,990). But a potential price hike due to tariffs could erode this edge, pushing buyers toward domestic alternatives or delaying purchases altogether.

Charging infrastructure also remains a concern. The Reuters article includes an image of a Hyundai Ioniq 5 charging at the Chaeyi Stay Charging Station in Seoul, South Korea, captured on October 18, 2023. South Korea has made strides in expanding its charging network, with over 240,000 public chargers installed by the end of 2024, according to the Ministry of Environment. However, urban congestion and charger reliability issues persist, potentially contributing to the demand slowdown.

EVXL’s Take: A Wake-Up Call for the Industry

Hyundai’s production pause should serve as a wake-up call for the EV industry. While the company’s long-term strategy—evidenced by its $21 billion U.S. investment—positions it well for future growth, the immediate challenges of tariffs and subsidy cuts expose vulnerabilities in the global EV supply chain. For EVXL readers, this news raises questions about the resilience of EV adoption in a shifting economic and regulatory landscape.

The U.S. tariff, in particular, highlights the risks of relying on imported vehicles in a protectionist policy environment. Hyundai’s decision to hold prices steady for two months is a consumer-friendly move, but it’s unlikely to be sustainable if demand doesn’t rebound. EV owners and enthusiasts should watch closely for potential price adjustments or shifts in model availability as Hyundai navigates these headwinds.

Moreover, the broader slowdown in EV demand signals a need for innovation beyond just manufacturing. Automakers must invest in consumer education, improve charging infrastructure, and develop more affordable models to sustain momentum. Hyundai’s Ioniq 5 and Kona Electric are strong contenders, but the industry as a whole must adapt to a new reality where government support is no longer guaranteed.

As the EV market evolves, Hyundai’s ability to balance short-term challenges with its long-term vision will be critical. For now, the Ulsan production halt is a stark reminder that even major players are not immune to the complexities of the global EV transition.


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Haye Kesteloo
Haye Kesteloo

Haye Kesteloo 是以下网站的创始人和主编 EVXL.co他在该网站报道所有与电动汽车相关的新闻,涉及的品牌包括特斯拉、福特、通用、宝马、日产等。他在无人机新闻网站 DroneXL.co.您可以通过以下方式联系 Haye:haye @ evxl.co 或 @hayekesteloo.

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