Kia vows to fight Chinese EV rivals on price in Europe, prioritizing market share over short-term profit

Kia's EV lineup. From left: EV9, EV6, EV3, EV4 and EV5. [Kia]

Kia said it will take on Chinese brands head-to-head in Europe's electric vehicle market, securing market share even if it means accepting lower EV profitability in the near term. The automaker drew a line, however, at expanding incentives further in the second half of this year.

Kim Seung-jun, Kia's executive vice president and head of financial planning, said at the company's second-quarter 2026 earnings conference call Friday that Kia had made "some price adjustments and provided incentive support in Europe to respond to Chinese competitors," adding that "for now, a strategy of growing market share is needed, even if it means giving up some EV profitability."

Europe is the market where Kia's EV sales growth has been most pronounced. Kia's retail sales in Western Europe reached 151,000 units in the second quarter, up 12.9 percent from a year earlier — nearly three times the Western European auto market's overall growth rate of 4.8 percent over the same period.

EV sales in Western Europe surged to 52,000 units, a 101.5 percent increase year on year, and Kia's EV market share in the region expanded from 4.2 percent for full-year 2025 to 5.3 percent in the second quarter of this year. The rapid growth of mass-market EV models such as the EV2, EV4 and EV5 has also intensified price competition as Kia works to counter the low-cost offensive from Chinese EV makers.

Kia's compact electric SUV, the EV3. [Kia]

Kia said the expanded incentives and price adjustments in the second quarter resulted in a 723 billion won ($492 million) hit to earnings. The average per-vehicle incentive in Europe rose by more than 1,000 euros compared with a year earlier.

Kim said the price gap with Chinese rivals in Europe was simply too wide to ignore in the short term, making price adjustments and incentives a necessary response. "We are working to improve product competitiveness and secure cost efficiency, but it will take some time before those efforts bear fruit," he said.

Kim ruled out a further increase in incentives in the second half, saying Kia had already raised European EV incentives in the second quarter to reflect its full-year sales strategy and expected to hold them at that level through the rest of the year.

While the push to grow EV sales is currently weighing on overall profitability, Kia said it expects the gap between EV margins and those of hybrid and internal combustion engine vehicles to narrow from next year onward as EV cost improvements kick in.

Kia said a shift in its sales mix — driven by a rapid rise in the share of lower-margin mass-market EVs in Korea and Europe — created a 178 billion won earnings drag in the second quarter. Strong sales of high-margin SUVs in North America provided some offset, but were partly countered by the surge in EV2, EV4 and EV5 sales in the domestic and European markets.

Kia's global EV sales mix rose from 7.4 percent in the second quarter of last year to 13.2 percent in the same period this year, a gain of 5.8 percentage points. In Korea, the EV share more than doubled from 11.9 percent to 24.5 percent, while in Western Europe it climbed from 19.5 percent to 34.7 percent. Over the same period, the global share of hybrid sales also expanded, from 14.0 percent to 21.3 percent.

The Kia EV5 Standard, a pure-electric SUV. [Kia]

Hybrid vehicles are expected to serve as a key pillar of Kia's profitability defense. A Kia official said hybrids currently generate margins nearly 1.5 times higher than internal combustion engine vehicles, and that hybrid sales are growing alongside EV sales. "Hybrid margins are continuing to improve, so the overall blended margin should be able to strengthen to some degree," the official said.

Regional strategies are also diverging sharply. In Europe, Kia is leading with its electric lineup — the EV2, EV4, EV5 and PV5 — to compete against Chinese brands, while in the United States it is focused on boosting profitability through hybrid SUVs.

In the US market, ramping up Telluride Hybrid production and introducing the Sportage Hybrid were cited as key variables for the second half. Kim said Kia is currently increasing Telluride Hybrid output in the US and that the impact of that ramp-up will begin to show in the second half. "The Sportage Hybrid will go into full production and sales at Hyundai Motor Group Metaplant America," he added.

The new Telluride X-Line, X-Pro and Hybrid variants. [Kia]

Kia expressed confidence in hitting its full-year targets. Kim said the company expects to achieve its wholesale sales target of about 3.35 million units, retail sales of about 3.31 million units, and an operating profit target of 10.2 trillion won set at its investor day earlier this year. "We see room to grow roughly 10 percent in the second half compared with a year earlier," he said.

Raw material prices, exchange rates and incentives were flagged as the key profitability variables for the second half. Kia said it intends to address rising raw material costs through internal cost improvements and expense reductions rather than relying on currency movements. Kim said the company is "continuously working on fixed-cost reductions and cost improvement efforts internally," describing this as the foundation for sustaining the company's competitiveness.

The first Kia Sportage Hybrid produced at Hyundai Motor Group Metaplant America arrives on stage carried by an autonomous mobile robot, with Georgia Gov. Brian P. Kemp and first lady Marty Kemp aboard, on June 3. [Kia]

Kia also addressed its physical AI and robotics business direction during the call. The company said it expects demand for data related to autonomous driving and robotics to grow, and is reviewing plans to use data centers as a shared group-level asset going forward.

Kia posted consolidated second-quarter sales of 33.04 trillion won and operating profit of 2.63 trillion won. Sales rose 12.6 percent from a year earlier to a quarterly record, while operating profit fell 4.9 percent. Wholesale vehicle sales totaled 851,639 units, up 4.5 percent year on year.

Electrified vehicle sales were a key driver of results. Kia sold 296,000 electrified vehicles in the second quarter, up 60 percent from a year earlier, with electrified vehicles accounting for 35.3 percent of total sales. Of those, 110,000 were battery EVs and 178,000 were hybrids.

The operating profit margin came in at 8 percent, below the year-earlier level, but marked the third consecutive quarter of improvement since bottoming out at 5.1 percent in the third quarter of last year, when the full impact of US tariffs first hit earnings.

kwater@heraldcorp.com