Yes, it is really cold, but something that I have noticed the was never a case with any of my past cars is the amount of ice that is forming on the inside of the windshield. This has me more wondering as it might tie in with the distinct smell of windshield washer fluid when you use the washer/wiper option. As I get this issue with both of my Niro's, I am wondering if this is just a design issue. Tag that along with it takes just about forever for the engine to warm up, and the defrost option even with the aux heater takes just too long to work. If it was condensation inside, then just having luke warm air would work, but this is a good 1mm of ice. Short of using an actual ice scraper on the inside of the windshield, you are stuck to see. I was told on past vehicles that trying to clean that off just makes the situation worse as you end up with smudge marks and haze on the inner part that then requires a good cleaning. Not something that you'd plan on doing every time you get into your car to drive, especially in the freezing cold of winter.
What is the interior ice situation like for others in cold climates?
I don't have any first-hand experience with interior frost on the Niro, due to the climate where I currently find myself. But when I lived in more northern climes, I had a habit of always cracking the window on other cars I've owned (even in sub-zero degrees F) until the defroster was at a point where it could be effective. The idea there (which seemed to work for me) was that your breath can fog and even ice the interior windshield, but if you crack the window, the interior humidity doesn't build as fast. I also do this when it's a reasonably warm day, but raining, and I've just gotten in the car with damp clothing. It seems to forestall the time when I'll actually need to defog the windows (which otherwise occurs very quickly if I have damp clothing on a rainy day).
Most modern cars automatically engage the A/C when you turn on the defroster. They do that for two reasons: one is to dry the air, the other is to circulate lubricant through your A/C plumbing. Your A/C system will be happier if you allow it to run every so often, even in the winter. So if you're manually turning off the A/C after you hit the defrost button, you might be shooting yourself in the foot in two different ways. I try to let the A/C run for at least two minutes every month in the winter, in order to keep the various rubber seals from drying out. Winter time use of the defogger usually makes this regimen almost automatic.
But with all that said, there is a fair amount of discussion in the owner's manual about how to respond to interior fogging problems. Enough discussion in fact that it kind of has a "bad smell". Sort of like when some product is "new and improved" and claims to no longer have "problem X" and you notice that it actually now has "problem X" when it never did before? As a wild guess: something about the Niro's fan-off ventilation system might be different, perhaps for fuel economy reasons. Maybe it's about the way the air-intakes are configured in proximity to the hood, or maybe it's kind of like modern aircraft that have discovered they could boost fuel efficiency by reducing the rate at which they allow external fresh air into the cabin. Although in the case of aircraft, they have to spend energy pressurizing any air they introduce, and that's not a requirement for a Niro.
Bottom line: try cracking your window until the ICE is warm enough to let the climate system blow heat, and try letting the A/C run, even in cold weather, if the defog button turned it on. And if those ideas fail, maybe go back and read the manual's discussion on the interior fogging topic. I don't trust my memory enough to confidently quote back everything I read about that a few months ago.