[Car War Seen Through IAA] Electric Vehicle Industry Escalates into International Competition

Limitations of Industry Growth Through Competition Among Companies
Olaf Scholz, German Chancellor
"Major Investments Planned in Charging Infrastructure"
China's Success Through Large-Scale National Investment
United States Growing Industry via IRA

As electric vehicles (EVs) flood the market, replacing traditional internal combustion engine vehicles, the competition has expanded from simple rivalry between companies to a contest among nations. Governments around the world are actively investing on behalf of companies. The market is evolving into one where competition cannot rely solely on corporate innovation.

German Chancellor Olaf Scholz is giving a speech at the 2023 IAA Mobility Show held in Munich on the 5th (local time). [Image source=Yonhap News]

On the 5th (local time), German Chancellor Olaf Scholz stated at the opening ceremony of the 2023 IAA Mobility Show held in Munich, Germany, “Germany will introduce a law mandating that 80% of all gas stations provide fast charging of 150 kW or higher,” adding, “This is the first among European countries.” In addition, Chancellor Scholz announced plans to invest 58 billion euros (approximately 83 trillion KRW) for the expansion of electric and other charging stations and the transition of industrial processes.

Electric vehicle charging. Photo by Hyunmin Kim kimhyun81@

This announcement is analyzed as an effort to promote the adoption of electric vehicles in Germany. According to data from the German Association of the Automotive Industry, the number of pure electric vehicles in Germany as of April this year is about 1.2 million. This falls far short of the federal government’s goal to have 15 million electric vehicles by 2030. Charging stations are also insufficient. While there are 700,000 private electric charging stations in Germany, the number of public charging stations currently stands at 90,000. To meet the plan of having 1 million charging stations by 2030, the number of public charging stations must be increased more than threefold. Chancellor Scholz said, “Through such investments, the decision to purchase an electric vehicle will become much easier.”

Oliver Zipse, Chairman of BMW Group, is taking a commemorative photo in front of the concept model 'BMW i Vision Dee'.
[Photo by BMW Korea]

This also responds to requests from automakers for government support. Oliver Zipse, Chairman of BMW, said in an interview with a German media outlet on the 1st that without concrete policies such as long-term infrastructure development, it would be difficult for the automotive industry to grow. Referring to China, he stated, “Based on a clear industrial policy strategy, a value chain for the electric vehicle industry is being established, and companies are developing.”

Electric mid-size SUV C10 from Chinese electric vehicle startup Lingpao
Photo by Oh Gyumin moh011@

In fact, the Chinese government is making enormous investments in the electric vehicle industry. In June, it announced a tax reduction plan of up to 72 billion dollars (approximately 95 trillion KRW) over the next four years to promote sales of pure electric vehicles and plug-in hybrid electric vehicles (PHEVs). The amount spent on electric vehicle subsidies over 14 years since 2009 reached 160 billion yuan (approximately 30 trillion KRW). Meanwhile, the United States is encouraging the expansion of electric vehicle production and assembly in North America through the Inflation Reduction Act (IRA). Electric vehicles finally assembled in North America can receive subsidies of up to 7,500 dollars.

Investment begets further investment. Last year, investment in Chinese electric vehicle-related startups doubled compared to the previous year, reaching 15.2 billion dollars. For example, German Volkswagen has partnered with Chinese XPeng Motors for joint vehicle development and acquired a 5% stake in the company for 700 million dollars. It has also engaged in technological cooperation with the startup company Lingpao. Volkswagen plans to purchase Lingpao’s electric vehicle platform and apply it to the production of its sedan model ‘Zeta.’ According to data from the U.S. Alliance for Automotive Innovation, as of the first quarter of this year, automotive and battery companies invested 115 billion dollars in the U.S. and announced plans to build 24 battery factories.

Such investments lead to growth in the automotive industry. The expected number of electric vehicle sales in China is about 6 million, which exceeds the sales volume of all other countries combined. In the United States, the share of electric vehicles in total vehicle sales was only 4.3% at the end of 2021, but after the IRA took effect, it grew to 6.9% last year and 8.6% in the first half of this year.

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