"Eco-friendly Vehicle Market Grows 22.3% Annually... Opportunity for Our Country"

Bank of Korea's Report on 'Global Eco-friendly Vehicle Market Trends and Characteristics'

Electric vehicle charging station at COEX, Samseong-dong, Gangnam-gu, Seoul [Image source=Yonhap News]

The eco-friendly vehicle market, including electric cars, is expected to grow significantly at an annual rate of 22.3% until 2030, driven by major countries' carbon neutrality policies. The Bank of Korea anticipates that the expanding demand for batteries during the growth of the eco-friendly vehicle market will present opportunities for South Korea.

On the 13th, Jang Byung-hoon, Manager of the Asia-Pacific Economic Team at the International Economy Department of the Bank of Korea’s Research Bureau, and Researcher Bae Gi-won stated this in the report titled "Global Eco-Friendly Vehicle Market Trends and Characteristics" published in the Bank of Korea’s weekly publication, Overseas Economy Focus.

According to the report, the global eco-friendly vehicle market continues to show strong growth through regulations related to carbon emissions and support policies such as subsidies provided by various countries.

While global automobile sales are contracting, eco-friendly vehicle sales increased at an average annual rate of 21.8% from 2018 to 2020. In the European Union (EU), 18% of newly registered vehicles were eco-friendly cars recently.

In South Korea as well, eco-friendly vehicles accounted for 5.7% of automobile sales and 9.5% of automobile exports as of last year.

The Biden administration in the United States announced an executive order to replace half of new car sales with eco-friendly vehicles starting in 2030. The EU has also set a goal to achieve carbon neutrality by 2050 and plans to ban the sale of internal combustion engine vehicles by 2035.

Electric vehicles, which hold the largest share in the eco-friendly vehicle market, are expected to have batteries as a key factor determining the competitiveness of automobile companies, unlike traditional internal combustion engine vehicles.

Batteries determine the performance, driving range, and safety of electric vehicles, and account for 30-40% of the production cost of electric vehicles, significantly influencing their price.

However, electric vehicles have fewer parts compared to internal combustion engine vehicles, and outsourcing of core components is possible, which is expected to intensify market competition. Initially, a few companies led the market, but recently, competition has intensified as new electric vehicle specialized companies have increased.

The report explained, "As big tech companies are also expected to newly enter the electric vehicle market based on their technological competitiveness, competition is likely to become even more intense in the future."

If electric vehicles replace internal combustion engine vehicles, employment within the automobile industry is also expected to decline. In the United States, if 50% of all vehicles switch to electric vehicles, it is estimated that up to 74,000 jobs will disappear by 2030.

The report pointed out that, following the COVID-19 pandemic, vulnerabilities in the global supply chain of the automobile industry have been revealed, and with the rapid growth of the eco-friendly vehicle market, major countries are showing movements to strengthen the establishment of related industrial ecosystems domestically.

The report explained, "In this process of ecosystem transformation in the automobile industry, the expanding demand for batteries and electronic components is expected to act as an opportunity factor for South Korea’s industry."

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