Saturday, August 24, 2019
Korean Auto Makers Lose Dominance in Local Eco-friendly Car Market
Missing Chances
Korean Auto Makers Lose Dominance in Local Eco-friendly Car Market
  • By matthew
  • June 24, 2014, 03:52
Share articles

Hyundai Motor's Sonata Hybrid.
Hyundai Motor's Sonata Hybrid.

 

The global eco-friendly vehicle market is steadily growing, despite a weak outlook. Tesla Motors, BMW, and Nissan Motor Company, which are viewed as leaders of electric cars, are discussing a business partnership scheme for charging networks. Therefore, much attention is being paid to their next move. 

The Korean eco-friendly car market, on the other hand, is in a stalled growth mode, owing to a lack of government policies stemming from controversy surrounding the “low carbon vehicle fund system” and local auto makers’ passive responses. If nothing changes, Korean auto manufacturers are likely to lose domination in the local eco-friendly car market. 

According to market research firm Inside EVs on June 20, US eco-friendly vehicle makers reported the best monthly sales in May by selling 12,053 units. Accumulated sales reached 42,570 units, a 27.5 percent year-on-year gain. 

Vehicle types have also become diverse. In 2010, there were only three models in the US eco-friendly vehicle market: the Chevrolet Volt, the Nissan Leaf, and the Mitsubishi i-MiEV. But there are 17 models as of late May, and the market is projected to grow further, since new models like the 2014 Mercedes-Benz B-Class Electric Drive and the BMW i8 are going to be introduced into the market. 

On top of that, ongoing discussions about sharing charging networks that are separately run are expected to play a positive role in the expansion of the green auto market. The Financial Times reported that BMW, Tesla Motors, and Nissan Motor Company recently held a closed-door meeting to discuss ways to cooperate with electric car charging networks. 

Tesla is widely regarded as the driving force behind the electric car craze, which changed the notion of electric vehicles from economically feasible to premium products. Nissan has the Leaf, which surpassed 100,000 units in sales for the first time in the global market. BMW’s i3 and i8 are receiving a warm response from the market as well. The industry thinks that their cooperation will have a huge influence on creating a single electric vehicle (EV) charging standard.

In contrast, the local eco-friendly car market in which electric vehicles have just started to be sold is drifting aimlessly due to the controversial low carbon vehicle fund system. 

“We will create a plan after reviewing a report that puts together the opinions of three relevant government departments, i.e., the finance ministry, the industry ministry, and the environment ministry, which is due to be released during this month,” said Environment Minister Yoon Seong-kyu on June 17. The Minister added, “Persuasion of and agreements among involved bodies are prerequisites to any progress. Once the report is published, we are going to discuss the system.”

However, those three government agencies are unlikely to reach an agreement, given that they couldn’t find common ground and were in confrontation with each other over the issue during the hearing held in the third week of June. If they fail to reach an agreement and the system won’t be implemented as a result, there will be no alternative policy that promotes green cars. 

The Ministry of Environment is responsible for the distribution of eco-friendly cars, but the Ministry of Trade, Industry and Energy (MOTIE) is in charge of charging standards and the R&D field. The Ministry of Land, Infrastructure and Transport has to be consulted in the transportation area as well. Hence, coherent policies among government agencies are badly needed at the moment. 

The industry is passive, too. Some auto makers including BMW are actively seeking to build EV charging infrastructure, but the number is far from sufficient. Industry analysts are saying that government support is essential for the construction of infrastructure. Nevertheless, a support project for infrastructure will end this year. 

Charging methods are not compatible with each other, either. Only the BMW i3 and the Spark EV adopted the SAE combo charging standard, and other companies like Kia and Renault Samsung Motors are using different quick charging methods. Many in the industry are calling for a unifying charging standard, but the MOTIE has a wait-and-see attitude in that there is no unifying standard in the global market. 

An industry source remarked, “The local market is widely acknowledged as the best place to nurture the eco-friendly car industry, because the nation has a competitive advantage and technical skills in lithium-ion secondary batteries as shown by Korea’s dominance in the global secondary cell market thanks to Samsung SDI and LG Chem. Moreover, Korea’s small amount of land is favorable to building charging infrastructure.” The source concluded by saying, “If the government provides full support and the industry cooperates with each other, local companies could lead the market in the future. But, I feel sorry for the fact that it is not the real situation now.”