The Key to Overcoming the COVID Slump is 'Eco-Friendly'

[Image source=Yonhap News]

[Asia Economy Reporter Park So-yeon] Despite the slowdown in South Korea's automobile exports due to the impact of the novel coronavirus disease (COVID-19), exports of eco-friendly vehicles such as plug-in hybrids (PHEV) and electric vehicles (EV) have shown rapid growth.

According to the report "Status of Eco-Friendly Vehicle Exports and Diagnosis of Our Competitiveness" published by the Korea International Trade Association's Institute for International Trade and Commerce, South Korea's eco-friendly vehicle export value increased from $3.6 billion in 2017 to $5.98 billion in 2019.

During the same period, the share of eco-friendly vehicles in total automobile exports also expanded from 8.6% to 13.9%.

Last year, South Korea ranked 4th in the world for electric vehicle exports and 5th for plug-in hybrid exports.

In the first half of this year, total automobile export value decreased by 27.3% compared to the same period last year due to the impact of COVID-19.

On the other hand, eco-friendly vehicle export value increased by 22.5%, and their share in total automobile exports reached a record high of 20.1%.

The report analyzed that the export competitiveness of plug-in hybrids and electric vehicles has continuously improved over the past three years.

Looking at the revealed comparative advantage (RCA) index, where a higher value indicates stronger export competitiveness, plug-in hybrids rose from 1.57 in 2017 to 2.32 in 2019, while electric vehicles more than doubled from 1.55 to 3.18.

Supported by the increase in eco-friendly vehicle exports, electric vehicle battery exports also maintained a strong trend.

Last year, exports of electric vehicle batteries (lithium-ion batteries) amounted to $4.68 billion, ranking 2nd in the world after China.

The report forecasted that as consumer interest in the environment rises and the automobile industry races to develop eco-friendly vehicles, competition among countries to dominate the eco-friendly vehicle market will intensify further.

It also assessed, "South Korea still shows favorable export performance, and with the government planning to focus on fostering eco-friendly vehicles, the export outlook is bright."

The report suggested that "to strengthen the growth foundation of eco-friendly vehicles, both the private sector and government must work together on proactive investment and infrastructure development," and outlined key government tasks including ▲ linking national technology development (R&D) projects with international standardization ▲ strengthening tax support for future vehicle technology investment ▲ expanding infrastructure for future vehicle technology testing ▲ efficient operation of environmental regulations ▲ and restructuring the business portfolio of the automotive parts industry.

This content was produced with the assistance of AI translation services.