U.S. tariffs could flip prices between Korean, Japanese hybrid cars
Japanese cars could end up being sold at lower prices than South Korean cars such as Hyundai Motor Co. in the American market when U.S. tariffs on Japanese automobiles drop from 27.5 percent to 15 percent on Tuesday.
Korean vehicles – still subject to a 25 percent tariff amid stalled tariff negotiations between Seoul and Washington – could become more expensive than competing Japanese brands.
According to multiple sources from the automobile industry on Sunday, the Kia Sportage Hybrid currently sells in the United States for $30,290, while the Toyota RAV4 Hybrid sells for $32,850.
If both companies were to pass on the full tariff burden – 25 percent for Hyundai and 15 percent for Toyota – the Sportage ($37,863) would end up more expensive than the RAV4 ($37,778).
This leaves Hyundai little choice but to minimize price hikes at the expense of profitability.
Since Hyundai Motor Group produces most of its HEVs in Korea and exports them, it cannot avoid the 25 percent tariff barrier. While the auto giant does plan to build an HEV production line at its Hyundai Motor Group Metaplant America (HMGMA) in Georgia, the earliest completion date is sometime next year.
This presents a major setback for Hyundai’s HEV sales growth in the U.S.
Hyundai and Kia’s HEV sales, in fact, have been on a steep upward trajectory in recent years – 90,614 units sold in 2021, 124,191 in 2022, 183,541 units in 2023, and 222,486 units in 2024.
From January to August this year, sales rose 47.9 percent on year to 198,807 units.
Industry insiders, however, agree that Hyundai cannot continue holding down prices if punitive tariffs remain in place.
According to Wards Intelligence, Toyota and Honda dominated the U.S. HEV market with market shares of 51.1 percent and 17 percent, respectively, from January to August 2025. Hyundai and Kia ranked third with 12.3 percent.
Compounding challenges, Hyundai Motor is also facing battery supply disruptions after a U.S. immigration raid at a battery plant co-owned by Hyundai Motor and LG Energy Solution Ltd. in Georgia.
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