Electric Vehicles and Batteries Race Ahead in China and Germany... Korea-US Cooperation Is the Answer

China's Rise... Preparing to Enter Korean Market
Local Battery Industry Shows Remarkable Growth
Volume Competition Essential for Market Dominance
Semiconductor Supply Key to Market Share

Tesla vehicles displayed at the automobile exhibition hall of the China Shanghai International Import Expo. (Photo by Yonhap News)

[Asia Economy Reporters Choi Daeyeol and Moon Chaeseok] The decline in the global market export share of K-electric vehicles and batteries last year is attributed to the relentless offensive by China and Germany, backed by active government support. In particular, China is leading the global electric vehicle market based on its powerful domestic market demand and abundant resources. There are concerns that the status of K-batteries could be at risk in the future, as there are prospects that China (CATL) might catch up with the lithium-ion ternary battery technology, which is the focus of the three major domestic battery companies. Experts point out the need to strengthen cooperation with the U.S., which is rebuilding its supply chain, and to provide policy support to target emerging markets.

Government Support, Financial Power, Abundant Resources... The Reason Behind China's Rise

China's advance in the global electric vehicle market is largely due to nurturing domestic companies backed by its huge market. China early on decided to focus on electric vehicles, considering that catching up with Europe, the U.S., Japan, and Korea in conventional internal combustion engine vehicles would be difficult. The relatively easier technological gap to bridge and significant influence over the entire supply chain of key raw materials also supported this move.

As a result, China has emerged as a respectable automobile exporting country. Since the early 2000s, China surpassed the U.S. to become the world's largest single market for vehicle production and sales, but it was strictly domestic-focused. Electric vehicles are different. China is increasing export volumes comprehensively, including to neighboring Asian countries and Europe. The Chinese government recently decided to extend electric vehicle subsidies, which were initially planned to end this year, and some local governments that had abolished subsidies are showing signs of reinstating them one by one.

In Korea, some electric models of commercial vehicles such as buses and trucks are imported from China, and it is reported that some Chinese manufacturers are preparing to enter the Korean market directly. Considering that Korean companies have virtually no electric vehicle production locally and no export volume to China, the situation has completely reversed. According to Korea International Trade Association statistics, from the beginning of this year to April, Korea has not exported a single electric vehicle to China, while imports of electric vehicles from China have increased to 2,753 units, nearly matching the U.S. at 2,781 units.

Riding on the strength of the Chinese electric vehicle market, Chinese battery companies are also showing remarkable growth in the global market. However, the market generally expects that the overall electric vehicle battery market will expand significantly in the future, so Korea's position in lithium-ion ternary batteries is not expected to shrink.

"Global Competition Intensifies... Prepare for a Long-Term Battle"

Experts advise that since the global electric vehicle and battery market is likely to be a long-term battle, preparations should be made with a long-term perspective. Regarding the recent decline in export share, they diagnose it as a direct hit caused by temporary external factors such as the shortage of automotive semiconductors. They also note that this is not a phenomenon unique to Korea, and it is difficult to conclude that Korea's export share disadvantage will persist steadily in the long term.

Professor Kim Pilsoo of Daelim University explained, "The ongoing shortage of automotive semiconductors and the supply of electric vehicles and batteries being far below overseas demand seem to have affected the export share of our companies. Since more than ten battery plants are operating or being built locally in the U.S., once the shortage of automotive batteries is resolved, it will positively impact the expansion of Korea's export share." He added, "Global demand for electric vehicles and batteries is expected to increase further after COVID-19, so securing semiconductors will be a turning point for export share."

There is also an analysis that it is unnecessary to be overly concerned about export performance itself. Exports are counted only when products made on Korean soil are sold overseas, but since supply chains are diversified across the U.S., Europe, and China, sales performance in regions where Korean companies have local plants is more important. Professor Lee Hanggu of Hoseo University said, "Because batteries are very heavy, companies are managing their businesses focusing on local production and sales, such as Hyundai Motor's Alabama plant in the U.S. and Kia's plant in Mexico, so export performance is not very meaningful."

However, since both electric vehicles and batteries are still in the early stages of market formation, a certain volume is necessary to secure initial market dominance. While competition is likely to be based on 'technology' in the mid to long term, it is expected to be a 'volume' battle for now. Around 2025, local battery plants in the U.S. jointly built by domestic battery companies such as LG Energy Solution and SK On and U.S. automakers will be completed.

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