"Dual Burden of Maintaining ICE and Investing in Future Vehicles"... Government to Support Transition of Automotive Parts Ecosystem

Only 578 Companies Specialize in Future Vehicle Parts

"Funding, Technology, and Workforce Shortages" Remain Key Hurdles

Government to Provide 8.3 Trillion Won in Policy Finance for Future and Autonomous Vehicles

15 Trillion Won Investment in Mobility Sector Over Five Years

The government is launching a full-scale support system for the automotive parts industry in response to the accelerated global shift toward future vehicles. As the burden on parts manufacturers increases due to the need to maintain internal combustion engine (ICE) facilities while simultaneously making new investments in the future vehicle sector, a public-private consultative body will be established to provide large-scale financial support.

The Ministry of Trade, Industry and Energy and the Financial Services Commission will hold the "Public-Private Joint Future Vehicle Transition Meeting" and the "Inauguration Ceremony of the Future Vehicle Parts Industry Consultative Body" at the Korea Automobile Industry Cooperative on May 14, co-chaired by Vice Minister Moon Sinhak of the Ministry of Trade, Industry and Energy and Vice Chairman Kwon Daeyoung of the Financial Services Commission.

This meeting has been arranged to promote the transition of the domestic automotive industry toward a future vehicle ecosystem, in a situation where global automobile electrification and autonomous driving are accelerating, and to identify challenges and policy tasks at both the regional and industrial sites.

At the event, the public-private "Future Vehicle Parts Industry Consultative Body" will be officially launched. The consultative body has been formed under the "Special Act on the Future Automotive Industry" and involves 18 institutions, including the Korea Institute for Advancement of Technology (KIAT), Korea Trade Insurance Corporation, Korea Trade-Investment Promotion Agency (KOTRA), and Korea SMEs and Startups Agency. Going forward, the body will identify challenges faced by the parts industry and support the transition to future vehicles across all areas, including business restructuring, finance, R&D, exports, and workforce.

The Financial Services Commission has noted that the burden of facility and R&D investment for small- and medium-sized and mid-sized parts manufacturers is increasing during the transition to future vehicles. In response, it has announced plans to supply a total of 15 trillion won to the mobility sector over the next five years through the National Growth Fund.

Additionally, this year, 8.3 trillion won of policy finance will be supplied to foster the future vehicle and autonomous vehicle industry, and 9.7 trillion won of policy finance will be provided to support structural improvement in the automotive parts industry.

On this day, the Korea Automotive Technology Institute will also announce the results of the "2025 Automotive Parts Industry Survey," which has been designated as a national approved statistic for the first time. According to the survey, the domestic automotive parts industry consists of 21,000 companies, employs 456,000 people, has sales of 207.6 trillion won, and investments totaling 7.1 trillion won.

However, the pace of transition to future vehicles was found to be still slow. There are 4,142 companies specializing in ICE parts, whereas there are only 578 companies specializing in future vehicle parts. The proportion of companies either pursuing or planning business conversion or diversification remained at only 6.1% of the total.

On the other hand, among companies that do not currently have plans for business diversification, 23.2% responded that they recognize the need for business conversion. Parts manufacturers identified funding burdens, lack of technological competitiveness, and workforce acquisition problems as major challenges in the process of business conversion.

The government plans to conduct regular annual surveys going forward to check the status and policy needs of the automotive parts industry and to publicly announce the results.

Industry officials emphasized, "We are facing a dual burden of maintaining ICE facilities while also having to make new investments in future vehicles," and added, "Comprehensive government support is needed across all fronts, including funding, workforce, R&D, and exports."

Vice Minister Moon stated, "To maintain the competitiveness of our automotive industry in the era of future vehicles, it is essential to support the parts ecosystem," adding, "We plan to establish comprehensive support measures for the transition of the automotive parts industry to future vehicles within the first half of this year."

Vice Chairman Kwon said, "The automotive industry is now evolving into a convergent advanced industry that combines AI, semiconductors, software, and data, and has become a national all-out effort. We will actively work with the Ministry of Trade, Industry and Energy and other related ministries to ensure that R&D, infrastructure investment, and financial support are organically connected."

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