"Chinese EVs Intensify Offensive... Urgent Need for 'Domestic Production Promotion Tax System'"

Chinese EV Market Share Soars from 4.7% to 33.9% in Three Years
KAIA Holds the 46th Automobile Mobility Industry Development Forum

As Chinese-made vehicles intensify their offensive in the domestic electric vehicle (EV) market, there are growing calls for policy measures to protect the local production base.

Jeong Daejin, Chairman of the Korea Automobile Mobility Industry Association (KAIA), is delivering a greeting at the 46th Automobile Mobility Industry Development Forum held at the Seoul Automobile Hall on the 22nd, with the theme "The Era of Future Car Competition, Survival Strategies for the Korean Automobile Industry." Photo by Choi Youngchan

The Korea Automobile Mobility Industry Association (KAIA) announced on the 22nd that it held the 46th Automobile Mobility Industry Development Forum at the Seoul Automobile Hall under the theme "The Era of Future Car Competition, Survival Strategies for the Korean Automobile Industry."

Jeong Daejin, Chairman of KAIA, stated in his opening remarks, "Competition with low-priced Chinese EVs is intensifying in the domestic market. The market share of Chinese EVs increased from 4.7% in 2022 to 33.9% last year, while the share of domestically produced EVs fell from 75% to 57.2%."

In particular, during the first quarter of this year, sales of domestically produced EVs reached 51,000 units, up 126.1% from a year earlier, but Chinese-made EVs surged 286.1% to 25,000 units, continuing their rapid pursuit.

Chairman Jeong further emphasized, "As major countries are strengthening policy responses to protect their domestic EV industries, it is urgent for us to introduce a 'domestic production promotion tax system' that can lead to a tangible increase in local production and operating rates."

Lee Taekseong, Chairman of the Korea Automobile Industry Cooperative Association (KAICA), also added, "If intensified competition in the EV sector worsens domestic production conditions, it could result in the contraction of the parts industry ecosystem and job insecurity. We must strengthen the competitiveness of our production base by introducing measures such as a domestic production promotion tax system."

Jo Cheol, Senior Research Fellow at the Korea Institute for Industrial Economics and Trade, who gave the keynote presentation, commented, "Chinese EVs are highly price-competitive and the quality gap is closing rapidly. The government should not focus solely on expanding distribution but should prioritize drastically lowering domestic production costs through tax measures and infrastructure development."

Song Dongjin, Managing Partner at law firm TheWiz, stated, "Japan, whose industrial structure is similar to ours, has included EVs in its Clean Energy Vehicle (CEV) subsidies and has also introduced a domestic production promotion tax system. Korea also urgently needs policy support such as tax credits to encourage companies to produce domestically."

Forum participants agreed on the necessity of establishing defensive strategies, including non-tariff barriers, to prevent the hollowing out of the domestic manufacturing base amid intensifying global protectionism and oversupply from China.

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