The recent fire involving a Mercedes-Benz electric vehicle (EV) in Incheon, South Korea, has sent shockwaves through the EV market. On August 1, a Mercedes EQE 350+ caught fire in an underground parking lot, destroying more than 140 cars and prompting proposals to restrict EVs' access to such facilities.

 Market Fallout and Panic Selling

The aftermath of the Incheon fire has been swift and dramatic. K Car, Korea’s second-largest used car trading platform, reported an astonishing 184 percent increase in used EV listings during the first week of August compared to the final week of July. The market is now flooded with used EVs, particularly the Mercedes-Benz EQE series. Over 100 EQE models are listed on SK Encar, Korea’s top used car trading platform, pushing the total number of EQE vehicles for sale to 115. Luxury electric vehicle prices have plummeted, with pre-owned 2023 EQE 300 models now listed as low as 59 million won (RM194,000), a significant drop from their original selling price of 92 million won (RM302,000).

 Automakers Respond with Aggressive Promotions

Facing growing consumer reluctance to buy EVs, automakers are rolling out aggressive promotions. Hyundai Motors is offering discounts of up to 5 million won (RM16,400) off the Kona Electric and a 10 percent discount on the popular Ioniq 5. Genesis, Hyundai’s luxury brand, is also providing up to 5 percent off all models, including the GV70 Electrified. Import automakers are feeling the pressure too: BMW offers discounts of over 12 percent on its flagship electric models, the i7 and iX, while Audi goes even further, offering nearly 30 percent off its e-tron models, including the high-performance RS versions.

 Regulatory Uncertainty and Buyer Concerns

Despite these deals, some buyers who had already placed orders for new EVs are now canceling them. Additionally, there's the worry of new regulations that could make owning an EV more cumbersome, such as restrictions on their use in underground parking lots due to fire risks.

 Korea's EV Market Challenges

Last year, Korea was the only major market among the US, Europe, and China to experience a decline in EV sales. The Ministry of Land, Infrastructure, and Transport reported that the country sold 1.625 million EVs in 2023, down 1.1 percent from the previous year.