"Urgent Need to Foster Domestic Electric Vehicles for Carbon Neutrality... Securing Price Competitiveness and Charging Infrastructure"

KAIA Hosts the 15th Automotive Industry Development Forum
Need to Reduce High Powertrain and Vehicle Production Costs
"Premature Phasing Out of Internal Combustion Vehicles Is Unwise... Diverse Portfolio Needed to Secure Investment Resources"

Jeong Manki, Chairman of the Korea Industrial Federation Forum, is giving a greeting speech at the "9th Industrial Development Forum and 13th Automotive Industry Development Forum" held on the 25th at the Automobile Hall in Seocho-gu, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Yoo Je-hoon] As the government declared carbon neutrality by 2050, there are claims that securing price competitiveness and production flexibility of completed vehicle companies and establishing charging infrastructure strategies are urgent for the development of the domestic electric-powered vehicle industry.

The Korea Automobile Industry Association (KAIA) held the 15th Automobile Industry Development Forum on the morning of the 13th at the Automobile Hall in Seocho-gu, Seoul, under the theme "Carbon Neutrality Strategy and Tasks Considering the Competitiveness of the Automobile Industry."

Jung Manki, chairman of KAIA, pointed out, "To achieve carbon neutrality by 2050, it is most important to develop the electric-powered vehicle industry domestically," adding, "While technological innovation is crucial as a global automotive industry restructuring is inevitable within the next 10 years, our companies face problems such as lower R&D capacity compared to global companies due to high labor costs."

Chairman Jung continued, "Considering R&D capacity, labor and management must come together to address labor cost increases, effectively resolve excess manpower mainly consisting of long-term employees, and secure high production flexibility," emphasizing, "Future government carbon neutrality policies should also be promoted in a way that facilitates the formation of a domestic industrial base."

At the forum, an analysis was presented that securing price competitiveness is urgent to achieve an industrial structure transformation to electric-powered vehicles. Currently, the price of electric-powered vehicles is 1.8 to 4.1 times higher than that of internal combustion engine vehicles of the same class, and especially for powertrain parts, the price is 2.6 to 3.7 times higher, while production volume is only 35,000 units (30,000 electric vehicles, 5,000 hydrogen electric vehicles), making it difficult to achieve economies of scale.

Labor rigidity, which causes high production costs, was also identified as a problem. According to the Japan Automobile Parts Association, the man-hours for electric-powered vehicles decrease by about 20-30% compared to internal combustion vehicles, but the current labor rigidity?where dispatch, substitute work, and dismissal are not allowed, and prior consultation with labor unions is required for workforce changes and volume adjustments?can be an obstacle to securing price competitiveness.

Kwon Eun-kyung, director of the Korea Automobile Manufacturers Association (KAMA), said, "Especially for the three foreign companies, it is difficult even to assign internal combustion vehicle production models due to sales decline and loss expansion," urging, "Support policies such as maintaining and supplementing purchase subsidies, supporting cost reduction for powertrains (batteries), and supporting industrial restructuring and workforce restructuring are necessary to secure investment capacity for electric-powered vehicles."

At the forum, it was also argued that as the spread of electric-powered vehicles accelerates, related charging infrastructure construction strategies need to be reconsidered. Currently, the proportion of slow chargers relative to the number of electric vehicles is low at around 25%, and the spread is mainly focused on fast chargers.

Kim Cheol-hwan, managing director of Innosync Consulting, said, "Fast charging infrastructure should be used as a complementary charging method mainly for emergency charging, and basic charging infrastructure at residences and workplaces should be greatly expanded to dramatically improve charging infrastructure accessibility," adding, "It is also necessary to prepare specific costs and strategies related to power supply infrastructure construction to respond to large-scale electric vehicle deployment."

Regarding hydrogen electric vehicles, although the number of vehicles deployed is about 12,000, ranking first in the world (35%), hydrogen charging station construction ranks fourth globally, indicating a mismatch. Park No-hoon, senior researcher at KAMA, explained, "To achieve the government’s goal of building 180 stations by the end of this year, a balanced regional approach and a speedy deployment policy are necessary," adding, "Support for private operators should be expanded, and convenience and accessibility to improve charging conditions must be strengthened."

However, at the forum, there was also criticism that rushing the spread of electric-powered vehicles should not lead to losing the internal combustion vehicle base. Professor Song Han-ho of Seoul National University explained that analyzing carbon emissions from a well-to-wheel (WTW) perspective of automotive fuels shows that the superiority of emissions between electric vehicles and hybrid vehicles varies depending on how each country’s power generation portfolio is constructed.

For example, in regions like California, USA, where the proportion of renewable energy generation is high, electric vehicles have lower emissions, but in China, which relies heavily on coal-fired power generation, electric vehicles emit more than hybrid vehicles. Professor Song added that domestically, electric vehicles and hybrid vehicles have similar emissions in the compact segment, but in the mid-size sports utility vehicle (SUV) segment, the full lifecycle greenhouse gas emissions of electric vehicles increase relatively significantly.

Director Kwon emphasized, "The phase-out of internal combustion vehicles should be approached cautiously for an effective transition to the electric-powered vehicle era," adding, "It is important for internal combustion vehicles to play a certain cash cow role to secure investment funds, and considering our high dependence on China for raw materials, a diverse portfolio of vehicles with various power sources must be maintained."

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