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Worldwide Demand for Environmentally-Friendly Vehicles
Source: pixabay
Governments and global organizations all over the world have begun to set policies to limit CO2 emissions. One focus is on reducing the number of internal combustion engine vehicles, which are one of the leading causes of CO2 emissions. To accelerate the transition to these new standards governments are working to incentivize the adoption of environmentally friendly vehicles . Automobile manufacturers who are directly affected by these new trends are accelerating their efforts to develop electric vehicles (EVs) which have equivalent or superior performance to internal combustion engine vehicles. Aligned with this global shift, Korea’s government has also introduced policies and planning to promote EV adoption, further stimulating the growth and opportunities evident within Korea’s EV sector and related industries.
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Korea Plans to Lead in EVs
In 2021, global sales of Korean brand automobiles reached 7.9% of the total market with over 4,404,000 automobiles. This was reported by the Korea Automobile Manufacturers Associations (KAMA) as a small increase from 7.4% in 2020.
Following the global trend, most of the Korean automotive industry’s new investment and research is related to EVs. Korea has become one of the world’s leading manufacturers of EVs. Based on a report by the Automotive Technology Institute Hyundai Motor Company sold 240,500 EVs in 2021, which is the fifth largest in sales globally.
Electric Vehicle Index in 2021
Source: E-Mobility Index 2021, Roland Berger - Advance Technology Center, compiled by IRC Consulting.
Units as determined by the E-Mobility Index 2021 report. Indexes are based on the following. Technology is based on the technological improvements implemented by the OEMs. Industry is domestic production, components and system production. Market is based on the EV market size.
Korea has strengthened its position as one of the largest car producers. The country stands out as one of the pioneers in the research, development and innovation for these new technologies. While in the index graph above Korea is ranked 5th overall, it is the clear technology leader among the countries represented.
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The Key Role of Government Planning
The Korean government has consistently acted to promote and enhance infrastructures for EVs through new support and policy measures. The government announced it is targeting to supply 500,000 EVs in 2022 for the domestic vehicle market. As this is a doubling of the number of vehicles from its 2021 objective, the government will also increase financial support for the industry by two fold, reaching a total of 2.4 trillion KRW (1.8 billion EUR).
EV Sales in Korea
Source: Katech, *2021 estimated
Units: number of vehicles
To create an EV-friendly environment, the government also promised to install 2,000 new fast-charging points and 60,000 standard charging points at specified core urban locations for EV drivers. Korea provides ongoing financial incentives for privately-owned buildings that install EV charging stations. Additionally, a network of EV support facilities that will be connected into navigation systems and applications to direct drivers to these facilities when they need charging or maintenance is in development.
EV Percentage of Domestically Registered Vehicles
Source: Ministry of Land, Infrastructure and Transport
Measures are already in place that require all new vehicles purchased for public organizations to be EVs. In the private sector, rental car services and corporate conglomerates are required to have a fixed percentage of EVs in their fleet. For commercial vehicles, the government provides financial support and tax reductions to encourage purchase of EVs.
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Opportunities Abound in Korea’s EV Industry
The automotive industry is one of Korea’s core industries. It accounts for over 10% of industrial production, manufacturing employment and overall exports. The industry is currently increasing its added value with the introduction of luxury brands and the development of EVs. The government will need to stay ahead of industry needs to keep it strong and healthy, and to continue driving its economic vitality. It is apparent that there will be even more room for growth once the country’s EV ecosystem is fully established.
Korea looks at Hyundai and Kia as the core strength of its EV industry, however these are not the only essential players. LG Energy Solutions, Samsung SDI and SK on not only produce most of the EV batteries in Korea but are also global powerhouses. In 2021, these three companies marketed 31.4% of all batteries sold in the world, making LG Energy Solutions (with sales representing 20.3% of global sales), Samsung SDI (5.6%) and SK on (4.5%) the main players in this market.
Korea’s EV market has not yet realized its full potential, and as EV production continues to ramp up there will be more need for up-to-date business intelligence on the technologies, players and market dynamics that will drive its continued development in Korea and worldwide. IRC Consulting has assisted international organizations to tap potential opportunities in Korea for four decades. In the EV sector, IRC has been involved in all parts of the supply chain from critical minerals to EV batteries to vehicle assembly.
IRC Consulting has a long-time partnership with Netherlands based, Larive International which focuses on emerging markets in Africa, Asia and Eastern Europe. With a focus on sustainable mobility food and energy they support Dutch and European companies in their market entry and growth all over the globe, including Korea.
For more information about the Korean automotive and EV market please visit http://www.ircconsultingkorea.com. For information regarding wider trends in the global automotive and EV market please contact our trusted partner Larive International http://www.larive.com.
contact@ircconsultingkorea.com
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