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As government EV mandates near, automakers introduce parallel product lines
Posted by Talbot Payne on September 12, 2023
California City, California — In 2020, Kia introduced the affordable, V-6-powered, three-row Telluride with upscale design, a suite of standard features, and a price tag $5,000 south of a comparable Ford Explorer or Toyota Highlander. It flew off dealer shelves and brought Kia the 2020 award for North American Utility of the Year.
Now Kia is bringing a second SUV to the three-row segment: the pricey, battery-powered EV9 that Car and Driver estimates will start at $56,000 — $20,000 more than the Telluride — when it hits dealer lots in the fourth quarter of 2023 to take on luxury EVs like the Tesla Model Y and Cadillac Lyriq. Though it shares the Telluride’s design cues and interior software, it sits on an entirely different battery-electric platform and introduces cutting-edge tech like haptic-touch dash buttons and self-driving assist.
The parallel product strategy in the same segment is evidence of the uncertain crossroads that today’s auto manufacturers face with massive, multibillion-dollar fines looming from California and the Environmental Protection Agency if they don’t meet new emissions standards.
The Telluride/EV9 double team covers a lot of bases: It satisfies consumer demand, conforms to looming government EV mandates, and recasts the Korean mainstream brand as a luxury player in the emerging, pricey EV market.
It’s a trend that other automakers are following as well. Kia is the first mainstream automaker to double up in the three-row segment, but expect Chevrolet to introduce two — gas and battery-powered — versions of the Chevrolet Blazer later this year in the mid-size SUV segment, much like the subcompact SUV Chevy Trax/Bolt EV and Silverado/Silverado EV pickup trucks before it. Ford is expected to follow with parallel versions of the Ford Explorer. Luxury automakers like Cadillac (gas XT5/battery Lyriq), BMW (gas X5/electric iX) and Mercedes (gas GLS/electric EQS) have already been working this parallel strategy.
In a consumer-driven market, automakers might roll out new EVs in a measured manner to gain an understanding of EV demand — particularly in a market where Tesla dominates 60% of EV sales. But like utilities, today’s manufacturers are governed by government mandates, and the hammer is about to drop with tough 2026 EV sales requirements that could cripple automakers if they don’t build electric models.
In 2026, the nation’s biggest auto market — California — will require, under its new Advanced Clean Cars II (ACCII) rules, that 35% of automaker sales be battery-powered vehicles. Failure to meet that goal will cost them a whopping $20,000 per vehicle that they are below that threshold. The percentage jumps to 43% in 2027, 51% in 2028, 59% in 2029, and 68% in 2030 on the way to outlawing the sales of gasoline cars in 2035. Fourteen other states — including Washington and New York — have adopted the standards set by the California Air Resources Board regulatory body.
Currently, just 17% of California sales are electric — and Tesla makes up 72% of those sales. Remove Tesla, and a mere 5% of sales are electric. And, according to data from S&P Global, 50% of EV buyers return to a gas car when they go back into the market.
California’s rules are one in a three-legged stool of regulation with the EPA and the National Highway Transportation Safety Administration also punishing gas-fired autos. Proposed EPA greenhouse-gas (GHG) based auto emissions limits of 82 grams of carbon dioxide/mile by 2032 would — similar to the CARB rules — require that 67% of automakers’ sales be battery-only by 2032. Only Tesla would meet that standard today.
Thus, the headlong rush of automakers to create a parallel fleet of Tesla-like EVs to their current gas models.
Kia’s product plans parallel those of government — not consumer — trends. The automaker intends to increase its EV offerings to seven vehicles by 2027 — a 250% increase over its EV lineup today — by 2027. In line with government rules, Kia says its fleet will be 70% electrified by 2030 on the way to a full transformation to EVs.
Meanwhile, EV sales, according to analysts, appear to be plateauing in the U.S. at 7-10% with EVs taking 103 days to sell on dealer lots, according to a Cox Automotive survey, compared to 45 days for gas cars. “Our analysis shows a natural resistance somewhere between 7% and 10% of local market share in a given state,” said iSeeCars analyst Karl Brauer. “That seems to be where it gets much harder to grow EV share after early adopters have bought in.”
Kia Marketing Vice President Russell Wager acknowledges that the brand’s initial EV offering, the mid-size EV6 (which was NACTOY Utility of the Year for 2023) is sitting on lots like other EVs.
“The early adopters got it,” he said. “Now we’ve got that next group — the next 25%. They want to know — is 300 miles enough for me? How quick does it charge? Where am I going to charge? It’s on us and the other (automakers) to continue to educate that you don’t need more than 250-300 miles of range because the average person is driving less than 100 miles round-trip.”
The Telluride was a breakthrough product for Kia. That success gave it the confidence to launch the sci-fi EV9, the first mainstream three-row electric SUV.
Its blocky, upright proportions look like it drove out of the movie “Tron.” No grille, vertical lamps, huge aero wheels. The interior is sleek, anchored by a mega 25-inch screen display and haptic-touch menu controls. The high-tech features are endless, from highway driver assist to massage seats to head-up display to voice commands.
With 240-300 miles of range, it could travel from Los Angeles to Vegas in a single stop on the platform’s 880-volt architecture. And to make sure other cities are as accessible, Kia — and six other automakers — are taking a page out of Tesla’s book and building a proprietary charging network.
Kia says that dealers are excited about the new electric product — just as long as Kia also keeps the Tellurides coming.
Henry Payne is auto critic for The Detroit News. Find him at hpayne@detroitnews.com or Twitter @HenryEPayne