"Global Competition Intensifies for Attracting Electric Vehicle Factories... South Korea Stalls (Comprehensive)"

Hyundai Motor and Kia at Standstill Amid Union Dispute Over Production Base Shift
China's Electric Vehicle Exports Reach $8.6 Billion Last Year, Over Fivefold Increase in One Year
Foreign Automakers Expand Local Production Systems... Hyundai Motor and Kia Aim for Rebound
Experts: "First-Mover Opportunity Open, Develop Our Own Model"

#Hyundai Motor Company began production of the Ioniq 5 at its Indonesia plant in mid-month. This vehicle is the first model to apply the E-GMP, an electric vehicle dedicated platform developed by Hyundai Motor Group, and it is the first time that Hyundai Motor and Kia have produced vehicles at overseas complete car plants. This marks a shift from the previous strategy of producing all units at the domestic Ulsan plant to relocating the production base overseas.

[Asia Economy Reporters Choi Dae-yeol, Yoo Hyun-seok] As global automakers are racing to build electric vehicle ecosystems, concerns are rising that South Korea’s production infrastructure is significantly lagging behind, necessitating urgent policy supplementation. There are worries that the competitiveness of the Korean automotive industry could greatly decline due to resistance from labor unions and policies that run counter to global trends regarding the introduction of new electric vehicles at existing plants.

According to the complete car industry on the 29th, Kia decided last November to convert its Gwangmyeong plant into an electric vehicle production base, but progress has stalled for five months. This is due to failure to reach an agreement with the labor union, which fears workforce reductions. In early 2020, Kia announced ‘Plan S,’ signaling a transition to future mobility companies such as electric vehicles, designating the Gwangmyeong plant as the third electric vehicle production plant after Gwangju and Hwaseong plants, but progress has been sluggish.

The labor union stated in mid-month, when the management explained the annual business plan, that "when rolling out electric vehicles, the union members prioritize job security," and "the union will not cooperate at all with management if job security for union members is not guaranteed." Hyundai Motor also allocated the sedan-type electric vehicle Ioniq 6 to the Asan plant, but the specific mass production schedule is undecided. To mass-produce the new model, the company and the labor union must agree on the ‘man-hours’?the number of workers assigned to the production line?but there is a large gap between labor and management. In fact, Hyundai Motor and Kia, which account for most domestic electric vehicle production, find it difficult to respond aggressively to the related market due to being hampered by the labor union.

Tesla Berlin Gigafactory, which recently started mass production

Union Threatens "No Cooperation Without Job Security"
Hyundai Motor and Kia Face Domestic Electric Vehicle Transition Pains
Overseas, Electric Vehicle Production Infrastructure Expands Continuously

In reality, demands for new electric vehicle allocations are strong among labor unions at major complete car plants, but there is a significant difference in perspectives regarding the workforce to be deployed on site. Electric vehicle assembly lines require about one-third fewer workers compared to internal combustion engines. Since the number of workers per model is a matter for labor-management agreement and the union is sensitive to reductions in union members, they do not easily approve.

As the domestic situation becomes difficult, automakers urgently turn their strategies overseas. Hyundai Motor, which decided to produce the Ioniq 5 at its Indonesia plant, is reportedly in the final stages of coordinating plans for electric vehicle production in the United States.

Last year, Hyundai Motor announced plans to invest $7.4 billion in the U.S. by 2025 for electric vehicle plants and future mobility businesses, refining specific business plans. Hyundai is expanding its existing U.S. plant in Alabama, while Kia, a group affiliate, is reportedly considering establishing a new electric vehicle dedicated plant locally. The industry expects the eastern part of the ‘Sun Belt’ region, including Georgia where Kia’s U.S. plant is located, to be a strong candidate. There is currently no electric vehicle dedicated plant in South Korea. Various regulations also hinder aggressive investments by domestic automakers.

In April of last year, visitors were touring the Volkswagen booth at the Shanghai Auto Show.

"Seize the Center" China Becomes a Battleground for Electric Vehicles
Fierce Competition Between Local and Foreign Makers
Electric Vehicle Plants Expand Continuously in China

While South Korea’s electric vehicle market is hampered by labor unions and various regulations, major global countries are actively investing in electric vehicles as future growth engines. China, in particular, is the most aggressive and combative in pouring money into the electric vehicle market. Until 2020, China ranked 7th in electric vehicle exports and was outside the top 10 in the overall passenger car market including internal combustion engines. However, in the past five years, China’s electric vehicle export value has surged by an average of 200% annually, seemingly taking the lead in major markets. Experts advise that since the future vehicle leadership has shifted to electric vehicles, the government should implement various incentives and investment policies such as attracting advanced overseas technologies and expanding exports.

According to the complete car industry, China’s electric vehicle export value last year was $8.6 billion, more than five times the previous year. In terms of export value, China ranks third after Germany and Belgium, which have a high proportion of high-priced electric vehicles, but in terms of volume, China leads with 500,000 units, far ahead of the second-ranked country (Germany with 230,000 units). The increase in exports indicates growing global demand for Chinese electric vehicles.

The Chinese automotive market, once considered a ‘frog in a well,’ is rapidly changing thanks to electric vehicles. With a domestic demand exceeding 20 million units annually and still significant growth potential, global automakers have entered early to target the local market, establishing stable supply chains. Additionally, China has actively promoted electric vehicle adoption and production through subsidy policies favorable to domestic companies. An industry insider said, "Electric vehicles have lower entry barriers compared to internal combustion engines, and 400 to 500 local companies directly produce and sell electric vehicles in China," adding, "Top local makers such as Chery, Geely, and Changcheng actively export overseas based on technology developed from domestic demand."

Foreign automakers have also expanded local production systems. Tesla, the world’s largest automaker, completed its Shanghai plant last year and is reportedly negotiating additional construction to increase annual capacity to 2 million units. Volkswagen, the second-largest electric vehicle maker, is also expanding local plants to establish a production and sales system of 1 million units annually by the end of next year.

Hyundai Motor and Kia, whose local market share plummeted after the THAAD controversy, also plan to rebound with electric vehicles. They are producing locally tailored strategic models and coordinating the launch of models applying their self-developed electric vehicle dedicated platform E-GMP. Since China is expected to remain the world’s largest complete car market, they cannot afford to ignore it. The industry views Hyundai Motor Group’s battery supply from China’s largest battery maker CATL as a move considering local electric vehicle production. Lee Ho-jung, a senior researcher at the Korea Automotive Technology Institute, explained, "Some Chinese brand electric vehicles are technologically on par with advanced countries," adding, "They have excellent product competitiveness by surviving the harsh consumer evaluations in the Chinese domestic market."

Last November, U.S. President Joe Biden (second from left) visited General Motors (GM) electric vehicle assembly plant Factory Zero.

"Electric Vehicles Must Be First Movers"

South Korea has so far ranked around fifth globally in electric vehicle production scale following internal combustion engine vehicles, but experts predict it will be difficult to maintain this level. Besides the small domestic market, it is hard to secure labor flexibility due to strong labor unions, and it is difficult for related industries such as vehicle parts to grow together.

Advanced countries such as the U.S. and Europe, as well as emerging countries, are actively establishing electric vehicle plants and core parts production bases like batteries, but there is no significant movement domestically. The Korea Automobile Manufacturers Association explained, "Last year, the proportion of electric vehicle production was 13.6% in China, 9.3% in Spain, and 8.2% in South Korea, similar to the global average, but it is excessively concentrated in some companies."

Professor Lee Ho-geun of Daeduk College advised, "With the current high-cost, low-efficiency structure, even companies with domestic plants find it difficult to have the will to produce electric vehicles," adding, "The government needs to create a business-friendly environment to induce domestic production."

Finding a compromise with labor unions is also urgent. In fact, Hyundai Motor and Kia spend months negotiating workforce deployment with unions even after establishing electric vehicle production lines. Korea GM recently reorganized production processes for new models at its Bupyeong and Changwon plants but has not yet finalized plans to produce electric vehicles domestically. The Korando e-Motion developed by SsangYong also recently received pre-orders but reportedly closed early due to battery supply issues.

Jung Man-ki, chairman of the Korea Automobile Manufacturers Association, said, "Labor-management relations are difficult, and workforce restructuring is not easy depending on market conditions, so domestic automakers worry about switching to electric vehicles only to bear costs and face difficulties." Professor Kim Pil-su of Daelim University said, "If we were fast followers in internal combustion engines, electric vehicles still have the potential to be first movers," adding, "Since the future vehicle leadership has shifted to electric vehicles, we need to develop our own model that can grow the entire electric vehicle ecosystem, including parts industries and charging infrastructure."

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