A mass sell-off of EVs has begun in South Korea, following a fire involving a Mercedes-Benz EV in Incheon that destroyed more than 140 cars and sparked proposals to restrict EVs' access to underground parking lots.

Since the fire on Aug. 1, the market has been flooded with used EVs. K Car, Korea’s second-largest used car trading platform, reported an 184 percent increase in used EV listings in the first week of August compared to the final week of July.

The Mercedes-Benz EQE series, which includes the standard EQE 300, the EQE 350+ -- the exact model involved in the fire -- along with its high-performance AMG counterpart and the EQE SUV, has been especially hard hit by the market’s reaction. Following the incident, over 100 EQE models have appeared on SK Encar, Korea’s top used car trading platform, pushing the total number of EQE vehicles for sale to 115 as of Friday.

As a result, prices for these luxury electric vehicles have taken a nosedive. Prior to the fire, used EQE models typically sold for 65 million won to 75 million won. Now, some certified pre-owned 2023 EQE 300 models listed as low as 59 million won, a significant drop from their original selling price of 92 million.

The fallout from the Incheon fire is exacerbating an already tough year for EV makers in Korea. Automakers are now rolling out aggressive promotions to counter the growing consumer reluctance to buy EVs.

Hyundai Motors has recently started offering significant discounts to entice buyers back into the EV market. These include up to 5 million won off the Kona Electric and a 10 percent discount on the popular Ioniq 5. Meanwhile, Genesis, Hyundai’s luxury brand, is offering up to 5 percent off all models, including the GV70 Electrified.

Import automakers are also feeling the pressure and are slashing prices to stay competitive. BMW is offering discounts of over 12 percent on its flagship electric models, the i7 and iX, while Audi has gone even further, offering nearly 30 percent off its e-tron models, including the high-performance RS versions.

Despite these deals, consumers aren’t rushing back to the EV market. According to car dealers in Korea, some buyers who had already placed orders for new EVs are now even canceling them. Adding to the anxiety are talks of new regulations that could make owning an EV more cumbersome, like restricting their use in underground parking lots due to fire risks.

The current crisis in Korea’s used EV market is a snapshot of broader challenges facing the industry. Last year, Korea was the only major market among the US, Europe and China to experience a decline in EV sales. According to data from the Ministry of Land, Infrastructure, and Transport and automobile market tracker Carisyou, the country sold 1.625 million EVs in 2023, down 1.1 percent from the previous year.

The decline has persisted into 2024, with EV registrations from January to July falling by 13.4 percent year-on-year.