Cho In-chul, left, managing director of passenger vehicles at BYD Korea and its other officials pose with the Chinese carmaker's Atto 3 electric SUV during its launch event in Incheon, Jan. 16. Yonhap

BYD Korea has hit an unexpected snag after failing to meet the timeline for the delivery of its Atto 3 flagship electric SUV, as the vehicle did not pass an updated subsidy rule set by the local environmental authority.

The price-competitive electric vehicle (EV) was widely expected to make a big splash in Korea, as evidenced by its initial preorders surpassing 1,000 within just a week of its launch in January.

The local subsidiary of the Chinese carmaker had promised to deliver the vehicles to local customers by mid-February, but the timeline has been delayed to an unconfirmed date. The preordered vehicles are currently stored at a port in Pyeongtaek, Gyeonggi Province.

The Atto 3 EV has yet to receive sales approvals from the Ministry of Trade, Industry and Energy and the state-run Korea Environment Corp.

The vehicle also failed to meet the updated subsidy rule from the Ministry of Environment. Starting this year, the ministry decided to grant EV subsidies to electric cars equipped with a battery state of charge (SoC) function. This enables drivers to monitor the remaining electricity in an EV's battery cell.

BYD Korea's dealership in Yongsan, Jan. 22 / Korea Times file

In response, BYD Korea promised to equip the vehicles with the function by updating its in-vehicle software in less than a year. But it remains unknown whether the environmental authority will accept the carmaker's proposal.

"BYD Korea is waiting for subsidy-related responses from local authorities, urging them to finalize their screening as soon as possible," a BYD spokesman said Monday, adding that it cannot finalize the precise timing for the delivery of the vehicles for the time being.

The problem is casting a gloomy outlook on the carmaker's plan to sell its vehicles here at a competitive price of less than 30 million won ($20,500) after subsidies.

If the vehicle does not receive enough subsidies, it may lose price competitiveness against EVs in a similar segment. For instance, customers here can purchase Kia's EV3 compact SUV at a range of more than 30 million won.

The EV3 is capable of driving up to 501 kilometers on a single charge, which is much farther than the 321 kilometers of the Atto 3.

Industry officials also said most customers will choose EVs from domestic carmakers, such as Hyundai Motor and Kia, unless Chinese vehicles ensure strong price competitiveness.

"It is true that the Atto 3 EV has made a strong sensation in the global market, but customers' preference for local brands remains strong," an industry official said. "They will not engage in a mass buying spree of Chinese EVs, if their prices are in a similar price range with those from Korean brands."

The delivery of the Chinese vehicles is expected to begin as early as April, as the trade ministry still needs more time to finalize its administrative procedures before announcing the list of eco-friendly vehicles.

The delayed delivery also raises concerns that the Chinese carmaker was too hasty in launching the brand and the vehicle in the Korean market at a critical time when BYD faces growing setbacks in its exports to Europe and the United States amid their toughening regulatory pressure on Chinese EVs.