Key Points
- Fires involving Tesla Model X and Mercedes-Benz EQE have intensified safety concerns in South Korea.
- Tesla’s dominance in the Korean EV market is now under scrutiny due to the fire incident.
- The South Korean government plans to introduce measures to enhance EV safety.
- The growing fears have negatively affected battery stocks, prompting brokerages to reconsider their stock price targets.
Concerns about the safety of electric vehicles (EVs) in South Korea have intensified after a recent fire involving a Tesla Model X, one of the country’s most popular EVs. The incident, which destroyed the luxury SUV after a four-hour firefighting effort, has further shaken consumer confidence in EVs, particularly following a similar fire involving a Mercedes-Benz EQE EV earlier this month.
The Tesla Model X fire occurred on a road in Yongin, Gyeonggi Province, raising alarms about the safety of EV batteries. Notably, Tesla uses batteries from Japan’s Panasonic, which has led to growing fears that even batteries from reputable non-Chinese manufacturers may not be immune to safety issues. This concern comes on the heels of the Mercedes-Benz fire, reportedly caused by a less-reliable Chinese battery, prompting widespread distrust in the German automaker.
Tesla’s involvement in this incident is particularly troubling for consumers, as the U.S. automaker has been making significant inroads into the South Korean market. According to the Korea Automobile Importers & Distributors Association, Tesla led EV sales in South Korea for the first seven months this year, selling 20,060 vehicles, surpassing domestic competitors like Hyundai Motor and Kia.
Despite the growing concerns, neither Tesla nor Mercedes-Benz has announced specific countermeasures to address consumer fears. While Mercedes-Benz Korea has hinted at potential compensation for those affected by the EQE fire, it has not provided concrete plans, such as a model recall. The South Korean government has stepped in, urging carmakers to conduct special inspections of their EV lineups. Land Minister Park Sang-woo announced that the government would introduce comprehensive measures to enhance EV safety early next month.
Experts believe persistent EV fires are likely due to internal defects in battery cells. Yoon Won-sub, a professor of energy science at Sungkyunkwan University, suggested that such defects are a plausible cause behind the recent fires. He also expressed greater confidence in the safety of batteries produced by South Korean manufacturers, such as LG Energy Solution, Samsung SDI, and SK On. However, he acknowledged that no battery could guarantee 100% safety.
The rising fears surrounding EV fires have also impacted the stock market, particularly affecting battery manufacturers. The KRX Secondary Battery Top 10 Index, which includes shares of LG Energy Solution and Samsung SDI, fell by 0.97% on Friday, even as the broader KOSPI index rebounded by around 2%. Major brokerages, including Mirae Asset Securities, are considering revising their target stock prices for secondary battery shares.
