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Kia Motors Corp. (000270.SE) said Thursday it plans to launch South Korea's first mass produced all-electric car next year, until now a gap in the offerings by the country's fast-growing car makers.
Korea's car makers make hybrid cars internationally, but they lag behind U.S. car giant General Motors Co. (GM) and Japan's Toyota Motor Corp. (7203.TO), while domestically, the country has been slow to build the infrastructure or provide the subsidies that would support the industry.
Hyundai Motor Co. (005380.SE), which together with Kia forms the world's fifth-largest carmaker by sales, currently produces the BlueOn pure-electric car only for government agencies under a pilot program, but Kia plans to sell the Ray all-electric car to customers from 2013.
Kia Motors, which is 34% owned by Hyundai Motor, said Thursday it will roll out 2,500 units of the Ray pure-electric mini car next year for fleet use by government agencies first. The Kia Ray EV can travel up to 139 kilometers on a single charge and speed up to 130 kilometers per hour, the company said in a statement. Hyundai Motor established production lines this year to build 250 mini BlueOn models for fleet use by public offices.
Also Thursday, the government said it will offer a tax support of up to KRW4.2 million ($3,630) per vehicle for consumers who buy the Ray and the SM3 ZE all-electric car Renault Samsung Motors Corp (RSG.YY), the South Korean unit of France's Renault S.A. (RNO.FR), to be launched in 2013.
But analysts and industry participants said it won't be enough. Kia said in a statement, that "more than anything else, the infrastructure including charging stations should be established first." Currently, the country has 500 charge stations and the government plans to increase the number to 3,100 by the end of 2012, Kia said in a statement.
A Renault Samsung spokesman said Thursday that there should be government subsidies as well as tax benefits to encourage electric car sales.
Analysts also questioned whether the government, or state-owned Korea Electric Power Corp, would have the will to embark on what would be an expensive build-out of a nationwide cable network for charging stations.
Hyundai Motor Group has seen sales growth globally surge in recent years, due to robust demand for sedan models Sonata and Elantra in both the U.S. and emerging markets. It expects global sales of 6.55 million vehicles this year and plans to sell 7 million in 2012, Kia President Lee Sam-ung told Dow Jones Newswires early this month.
But Kia and Hyundai are also behind in producing electric cars internationally. GM has the Volt, Toyota the Prius hybrid car, Japan's Nissan Motor Co. (7201.TO) sells the all-electric Leaf, and France's Renault, the all-electric Fluence ZE.
Hyundai and Kia launched hybrid versions of the Sonata and Optima sedan each this year in the U.S. where Toyota's Prius accounts for about 50% of the hybrid car segment. Hybrid electric cars are different from all-electric or pure-electric cars because they use gasoline on top of batteries.
-By Kyong-Ae Choi, Dow Jones Newswires; 822-3700-1903; email@example.com