S Korea takes steps to boost green car sector to combat slowdown

17-Jan-2020 Intellasia | SPGlobal | 7:02 AM Print This Post

South Korea is taking steps to enhance its eco-friendly vehicle industry as production of internal combustion vehicles wane amid a global economic slowdown and a lack of new models from domestic producers.

Register Now The country produced 3.95 million vehicles in 2019, 1.9 percent fewer year-on-year, after ending the year with 337,504 vehicles made in December 2019, down 5.4 percent from December 2018, data from the Ministry of Trade, Industry and Energy showed Thursday.

The annual fall was attributed to lower production at Renault Samsung Motors Corp. and strikes at GM Korea, the ministry said. The fall could have been larger save for higher exports of eco-friendly vehicles, which were at its highest in 19 years.

Annual green vehicle sales and exports amounted to 140,311 units and 258,669 units, respectively, up 13.5 percent and 31.7 percent from 2018.

Government invests in green cars

The positive performance of South Korea’s eco-friendly vehicle industry has prompted increased government spending, the latest of which is Won 380 billion ($327.3 million) by 2025.

On January 3, President Moon Jae-in said the investment will “help develop the world’s best eco-friendly car. We plan to complete our eco-friendly car line in all models by 2030.”

“By 2030, 33 percent of domestic new cars will be distributed as eco-friendly cars,” Moon said, adding that their usage will be supported “by expanding electric rapid chargers and hydrogen charging stations.”

To that end, South Korea plans to spend Won 950 billion on car subsidies and installing more charging stations in 2020, the Ministry of Trade, Industry and Energy said, about 60 percent more from 2019′s expenditure.

“In addition, we will turn domestic public transportation and freight vehicles into eco-friendly vehicles,” Moon said.

South Korea plans to encourage domestic car makers to expand their eco-friendly models to cover buses and trucks and not just passenger cars.

Green cars accounted for about 10.8 percent of all of South Korea’s vehicle exports in 2019. In 2015, eco-friendly cars accounted for about 1 percent of all exports.

Overall vehicle exports amounted to 2.40 million units in 2019, of which 258,669 units were eco-friendly cars.

By 2030, South Korea plans to increase the export ratio to more than 25%.

South Korea’s move to expand the ratio of green cars to conventional cars comes as global sales are expected to fall to 87.3 million units in 2020 versus 86.95 million units in 2019, projections from Hyundai Motor Group showed.

Steelmakers, automakers counter slow down

Amid the slowdown in the automobile sector, several steelmakers took moves to offset the bearish factor.

Mid-December 2019, Posco and China’s HBIS Group said they may set up a joint venture to develop, produce and sell high-end steel products for the automobile industry. The envisaged venture could be located in Tangshan, Hebei province, which is near HBIS’s Laoting cold-rolling steel plant.

In 2018, HBIS produced 7 million mt of steel for the Chinese automobile sector.

Kia Motors Corporation plans to sink Won 29 trillion over the next six years to expand its presence in the eco-friendly vehicle market and shift “from a business system focused on internal combustion engine vehicles,” it said.

Labeled Plan S, Kia Motors will focus on electric and purpose-built vehicles by 2025, aiming to account for 6.6 percent of the global market for such vehicles.

Starting 2026, the automaker will export 1 million green cars including 500,000 EVs across the world, excluding China.

https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/011620-s-korea-takes-steps-to-boost-green-car-sector-to-combat-slowdown

 


Category: Korea

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