Fundamental Problem
Renault Korea, KG Mobility (formerly SsangYong Motors), and GM Korea, three major domestic mid-tier automobile manufacturers, have begun preparations to enter the electric vehicle market. They are preparing for the launch of electric car models and the expansion of some production facilities. However, it appears challenging for them to secure a position in the domestic electric vehicle market already dominated by Hyundai Motor, Kia, Tesla, and other imported car manufacturers.
According to the Korea Automobile Manufacturers Association (KAMA) on June 27, the total number of pure electric passenger cars registered in Korea last month was 303,016. Hyundai and Kia accounted for 64% of this figure. Among imported cars, Tesla from the United States sold 49,157 units, securing 16% of the total market share.
Excluding Tesla, other imported electric cars, including Mercedes-Benz and BMW, achieved a 17% market share in the domestic electric car market last month.
On the contrary, the electric car sales of Renault Korea, GM Korea, and KG Mobility were only 6,694 units, accounting for a mere 2% of the total. Essentially, Hyundai, Kia, and imported car manufacturers are dividing the domestic electric vehicle market.
The three mid-tier companies have virtually no electric car models. Renault Korea’s SM3 EV, GM Korea’s Spark EV, and KG Mobility’s Korando E-Motion are currently being sold in the market. Even including the imported ZOE EV sold by Renault Korea and the Bolt EV sold by GM Korea, they only accounted for 7% of the total electric car sales last month.
Renault Korea is preparing for local production to improve its poor domestic electric vehicle market penetration. Although Renault Korea's Busan plant has adopted a mixed production method and can currently produce electric cars, the scale is limited. Once a dedicated production facility is established, electric car production and sales are expected to increase. Renault's Vice Chairman Guido Haak met with Busan Mayor Park Heong-joon during a visit to the French headquarters in Paris on June 20 (local time) and revealed that they are considering building an annual 200,000-unit electric car production facility at Renault Korea’s Busan plant.
KG Mobility plans to launch the Torres EVX, the electric model of the Torres compact SUV, in the second half of this year. They are also developing an electric pickup truck, the O100, based on the Torres model. GM Korea does not currently have plans to produce electric cars domestically but plans to launch ten electric vehicles by 2025, including the Cadillac Lyriq that will be launched in the second half of this year.
The biggest obstacle to the domestic production of electric vehicles by mid-tier automakers is batteries. It is difficult to increase electric vehicle production due to the insufficient production of batteries domestically.
KG Mobility plans to use Chinese batteries to secure batteries stably and lower the cost of electric vehicles. They have already formed a strategic alliance with China's BYD and are receiving batteries. BYD’s Lithium Iron Phosphate (LFP) battery will also be used in the Torres EVX.
The Renault Group is also focusing on securing batteries ahead of setting up the new electric vehicle line at the Busan plant. Particularly, Renault Korea, which needs to export electric vehicles to the European and American markets, urgently needs Korean-made batteries instead of Chinese-made batteries, which are excluded from subsidies.
However, it is not easy for the domestic battery industry to increase domestic production in such a short time. This is because there are limitations in increasing domestic investment in a situation where enough quantities have not been secured.
A battery industry insider said, “Most of the electric vehicle batteries produced domestically are consumed by Hyundai Motor and Kia.” He added, “It's challenging to suddenly increase domestic production capacity, as large-scale overseas factory investments that are already underway are a significant burden.”