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Kia Is Worried That Selling Too Many Gas Cars or EVs Could Hurt the Business

Kia claims that selling too many gas cars increases the risk of paying emissions-related fines, while selling too many EVs eats into the profit margins.

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posted on 3 days ago — updated on 1 second ago

Selling cars in Europe today requires a delicate balancing act. On one hand, combustion-engine vehicles remain the preferred choice among buyers. In the European Union, electric cars held only a 15.3% market share in the first four months of the year, according to data from the European Automobile Manufacturers' Association (ACEA). On the other hand, tougher legislation is forcing automakers to accelerate the rollout of EVs. Therein lies the problem.

Kia says it must tread carefully because favoring either side could backfire. Carlos Lahoz, the company’s Vice President of Sales in Europe, explained to Automotive News Europe why prioritizing ICE over EV, or the reverse, should be avoided: “If we rely too much on combustion cars, we risk not reaching the CO₂ targets and having to pay fines. If we push EV sales too much, we end up denting our profit margins.”

It’s no secret that the EU is breathing down the car industry’s neck with stricter emissions regulations. Some automakers, like Volkswagen and Renault, have expressed concern about potentially paying billions of euros in fines in 2025 alone for exceeding the newly enforced limits. The EU has granted carmakers an additional two years to meet these targets by calculating fleet emissions as an average over the 2025–2027 period, rather than requiring compliance in 2025 alone.

Nevertheless, automakers are facing significant headwinds. Stellantis’ chairman recently stated that engineers spend over 25% of their working hours solely on ensuring cars comply with increasingly stringent legislation. It’s safe to assume that meeting stricter emissions standards takes the lion’s share. Especially with 2035 looming, when automakers will be required to sell only EVs in countries that adhere to EU legislation.

But going all-in on EVs today isn’t a viable solution either. Lahoz acknowledges that electric cars still can’t match the profitability of ICE models. Battery costs remain too high to make EVs financially competitive, so Kia must strike the right balance between gas-powered and electric vehicles to maintain a sustainable business. Companies are still free to sell as many gasoline and diesel vehicles as they want in Europe, provided they balance those sales with plug-in hybrids and, especially, EVs to reduce average fleet emissions.

The issue Lahoz raised isn’t unique to Kia, as virtually all major automakers face the same dilemma. The development of tomorrow’s EVs is being funded by profits from today’s gas-powered cars. Price parity between the two has still not been achieved, with a few exceptions, primarily limited to Chinese manufacturers taking advantage of lower production costs.

Sales-wise, Kia is performing exceptionally well in Europe these days, even outpacing some of the most established names on the continent. ACEA’s data for the first four months of the year shows Kia held a 4.1% market share in the EU+EFTA+UK region, beating Ford (3.4%), Opel/Vauxhall (2.9%), Citroën (2.8%), Fiat (2.3%), and SEAT (1.7%). In fact, it even outperformed its bigger sibling, Hyundai (3.9%).

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Source: Automotive News Europe

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