"2035 Internal Combustion Engine Vehicle Phase-Out Pledge Raises Concerns Over Impact on Auto Parts Industry"

[Asia Economy Sejong=Reporter Kwon Haeyoung] The Ministry of Trade, Industry and Energy plans to propose postponing the introduction of President-elect Yoon Seok-yeol's pledge to phase out internal combustion engine vehicles by 2035. This is due to concerns that the domestic auto parts industry, which has secured competitiveness centered on internal combustion engine vehicles, could face a rapid collapse of the industrial ecosystem, effectively signaling opposition to the pledge.

According to the government on the 24th, the Ministry of Trade, Industry and Energy will deliver the results of an analysis on the regulatory costs, including the shock to the automotive industry caused by the implementation of the pledge to stop sales of internal combustion engine vehicles, to the Presidential Transition Committee. Earlier, President-elect Yoon proposed banning new registrations of internal combustion engine vehicles starting in 2035 as part of his climate and environmental crisis response pledges.

The ministry's review of the pledge is likely to be included in the transition committee's briefing on the day, and if not, it will be reported separately to the committee. A government official said, "There are significant industry concerns that the ecosystem could collapse, especially among parts suppliers, if sales of internal combustion engine vehicles are stopped in 2035. Since many countries will still allow sales of internal combustion engine vehicles in 2035, it is necessary to open overseas export channels for domestic parts suppliers who have secured competitiveness and to give time to prepare for the transition to future vehicles. We plan to convey this opinion to the transition committee."

Along with submitting the regulatory cost analysis results, the Ministry of Trade, Industry and Energy is reportedly planning to present multiple alternatives to the transition committee, including Option 1: delaying the introduction of the internal combustion engine vehicle sales ban, and Option 2: making the 2035 system non-mandatory and leaving it to industry autonomy.

The number of domestic companies exclusively producing internal combustion engine parts was 2,815 as of 2019. In the domestic manufacturing sector, the automotive parts industry accounts for 6.2% of employment, 6.5% of production, and 3.6% of exports. While the transition to future vehicles is necessary for carbon neutrality, there are many claims that the internal combustion engine parts industry holds a significant share in the Korean economy and thus needs time to reorganize its business.

For this reason, the Carbon Neutrality Committee also considered a complete phase-out of internal combustion engine vehicles by 2050 during the formulation of the '2050 Carbon Neutrality Scenario,' but ultimately shifted to maintaining internal combustion engine vehicles in 2050 on the premise of developing carbon-neutral fuels (e-fuel). Considering that the average vehicle lifespan is about 15 years, the committee effectively pursued a plan to completely ban new sales starting in 2035. In the end, President-elect Yoon's pledge can be seen as more radical than the Carbon Neutrality Committee's decision.

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