Comparing US, EU, South Korea
While the U.S. protects its domestic industries through the Inflation Reduction Act (IRA) and the European Union (EU) is investigating potential market distortions caused by subsidies provided to Chinese electric vehicle (EV) companies, the South Korean government is seemingly more complacent, operating without specific regulations in place.
In global markets like Europe, the aggressive push of cost-competitive Chinese vehicles is already evident. Based on last year’s statistics, Chinese EVs held an 8% market share within the EU. However, due to their prices being approximately 20% cheaper, Bloomberg has reported that this share could rise to 15% by 2025.
Reacting to these trends, the EU recently embarked on measures to counteract it. Ursula von der Leyen, the European Commission president, announced on Sept. 13 (local time) during her annual policy speech that they would commence investigations into the subsidies received by Chinese EV manufacturers, which have subsequently distorted market prices. The U.S., on the other hand, has already implemented the Inflation Reduction Act (IRA) since last year.
In contrast, South Korea’s EV subsidy regulations stipulate that as long as price and performance criteria are met, subsidies will be granted. In response to concerns this February that Chinese-made electric buses could dominate the Korean market, the South Korean government introduced conditions such as the necessity for an after sales service (AS) center and varying payments based on battery energy density.
However, the rise of Chinese electric buses continues unabated. According to data from Carisyou Research Institute, of the 1,131 electric vehicles sold in South Korea from January to July this year, 468 were Chinese electric buses, accounting for 41.4% of the total, a significant increase from 24% in 2019. GEELY’s electric trucks, CEA, after launching in South Korea in July, managed to sell 421 units in two months, making it the top-selling brand among imported commercial vehicles. Five out of the top 10 imported commercial vehicle models are from China.
Recently, Chinese automaker BYD unveiled images and specifications for four passenger models – HAN and QIN – on its Korean website. Industry insiders anticipate BYD will launch these passenger models in South Korea by the first half of next year at the latest. Earlier, following the introduction of its electric buses in Korea, BYD, in collaboration with GS Global, launched the T4K commercial 1-ton truck this year.
EVKMC, a Chinese vehicle importer in South Korea, had also planned to launch three Jiangling models and one CHERY passenger EV model during the first half of this year. However, the release has been temporarily halted due to local supply issues, among other concerns.