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[Editorial] EVs need policy focus

Government must offer more policies to shore up EV sector hit by slow sales

By Korea Herald

Published : May 1, 2024 - 05:30

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The Beijing Motor Show, otherwise known as Auto China, kicked off on April 25, showcasing new electric vehicle models armed with advanced digital solutions. The show features a wide range of global automakers including Hyundai and Kia, but it is the Chinese EV manufacturers that are attracting the most attention.

The strength of Chinese automakers at the industry exhibition reflects their rising market position. China became the world’s biggest car exporter in 2023, shipping a total of 4.9 million cars abroad, up 58 percent on-year. In particular, BYD, a leading EV maker from China, outpaced Elon Musk's Tesla in global EV sales last year, sending shock waves throughout the global automotive industry.

The South Korean government and major carmakers must closely watch the shifting trend in the car market where Chinese players are flexing their muscles with affordable prices and solid technology, as the EV trends are expected to reshape the global car industry, as well as related sectors ranging from electronics to artificial intelligence.

Especially noteworthy is the foray of Chinese technology companies such as Xiaomi and Huawei into the EV market, highlighting the greater importance of technology in the manufacturing of EVs compared with their gas-powered counterparts.

The global EV market is not without its problems, though. After years of dizzy growth, the global EV market is entering what is called a “chasm,” referring to a slowdown in demand just before mass adoption. There are a number of reports about slowing sales, rising inventory at retailers and consumer reluctance to adopt the new technology.

The Korean market has also been going through a rough patch. The cumulative number of EVs climbed from 90,923 in 2019 to 543,900 in 2023, according to government data. But the country’s EV sales in 2023 slumped to post the first-ever negative yearly growth. And the EV sales during the first quarter of this year tumbled by 25 percent from a year before.

Last week, a group of 11 car-related organizations led by the Korea Automobile & Mobility Association held a forum where experts called on the government to step up supportive policies for the EV industry saddled with slowing sales.

As with other countries, one of the major impediments to the mass adoption of EVs in Korea is the lack of charging infrastructure. According to a survey by Deloitte, when asked about their reservations regarding EV purchases, Korean respondents named charging time as their primary concern, followed by battery safety and insufficient charging infrastructure.

One of the experts at the forum said that Korea has around 290,000 EV chargers across the nation and that each charger handles an average of 1.86 EVs, a figure that is deemed better than other countries. But Korean drivers continue to complain about the inconveniences associated with EVs. Although many EV charging stations are available on highways, the number of chargers at apartment complexes and individual homes remains limited.

Some experts suggested raising overall EV subsidies to prop up sagging sales and introducing a discounted rate for EV charging, while others claim that the government should allow EVs to access the highway lanes originally reserved for buses as part of a set of nonfinancial incentives for EV owners.

In February, the government set the EV subsidy guidelines for 2024, which offer more incentives to EVs equipped with high-efficiency batteries made by Korean firms. This may help protect the fledgling domestic EV and fast-evolving battery industries to some extent, but some experts raise questions about their pricing competitiveness outside of Korea, where such targeted subsidies are not available.

Despite the current slowdown, EVs still promise a future of sustainable transportation and advanced automotive technology. Policymakers must focus on firming up the EV infrastructure in tandem with support policies for both EV buyers and manufacturers.