Korea-Europe Automobile Association "Need to Diversify Electric Vehicle Raw Material Supply Chains"

Regular Consultation Held in Brussels on the 10th

The Korea Automobile Manufacturers Association (KAMA) held a regular consultation with the European Automobile Manufacturers Association (ACEA) on the 10th (local time) in Brussels, Belgium. Photo by Korea Automobile Manufacturers Association

[Asia Economy Reporter Hyunseok Yoo] The automobile associations of Korea and Europe have come together to agree on the need to diversify raw material supply chains in the electric vehicle era.

The Korea Automobile Manufacturers Association (KAMA) announced on the 12th that it held a regular consultation with the European Automobile Manufacturers Association (ACEA) in Brussels, Belgium, on the 10th (local time).

Both sides emphasized that diversification of raw material supply chains must be achieved in the electric vehicle era. They agreed that Europe’s high dependence on parts from Ukraine and Russia, and Korea’s high dependence on China, cause production instability. In particular, they shared the view that dependence on specific countries for rare earths and battery raw materials in the electric vehicle era could lead to an overall crisis in electric-powered vehicle production.

KAMA stated, "The Korean industry is facing issues with parts supply and production disruptions due to shortages in raw material procurement," adding, "China monopolizes most of the key raw materials for electric vehicles, accounting for 58% of global processed lithium production and 35% of nickel production." It further expressed concern, saying, "Korea’s dependence on China is high, with 35% for rare earths and 88% for materials and parts, so if prices for parts or raw materials rise in the electric vehicle era, the industry could face a crisis."

ACEA expressed agreement and suggested that "joint responses related to supply chains in the electric vehicle era are necessary."

They also agreed that the high dependence on Russia and Ukraine for automobile parts procurement is a factor making the recovery of the automobile industry difficult. ACEA emphasized, "The shortage of wiring harnesses from Ukraine is causing disruptions in automobile production, and the suspension of imports of materials, parts, and energy from Russia is causing difficulties across the industry."

KAMA explained, "Completed vehicle manufacturers and 14 parts suppliers are facing factory shutdowns locally and resulting financial difficulties."

Additionally, both Korea and Europe argued that environmental regulations need to adjust their pace. ACEA expressed concern that although the European Union (EU) is pushing for stronger environmental regulations, the effects are insufficient and the automobile industry may become overly dependent on specific technologies such as electric vehicles. ACEA pointed out, "The EU Commission is pursuing stricter regulations, including standards aimed at phasing out internal combustion engines by 2035, but incentives such as expanding charging stations and setting reasonable energy tax rates are lacking." It added, "Regarding the Euro 7 standards, although companies need to increase investments compared to Euro 6, the reduction effect on air pollutants is not significant, so the benefits of introducing the regulation are limited."

KAMA expressed hope that the Yoon Seok-yeol administration would reasonably ease regulations. KAMA explained, "In Korea, the new 2030 NDC announcement requires strengthening existing fuel efficiency and greenhouse gas regulations," but added, "Considering the new government’s rationality and pro-business stance, regulations are expected to be reasonably eased." It further stated, "Fuel efficiency and greenhouse gas regulations and the mandatory electric vehicle sales system are overlapping regulations, so one of the two should be abolished or the regulatory penalties should be reasonably adjusted considering the overall regulatory impact."

Meanwhile, the regular consultation was attended by KAMA Chairman Jeong Manki and officials in charge of international trade and industrial analysis. From ACEA, Secretary-General Eric-Mark Huitema and officials responsible for international trade, greenhouse gas policy, and emissions participated. They discussed various issues including industrial trends, carbon emission environmental regulations, global supply chain issues, and the impact of the Russia-Ukraine situation on the industry.

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