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China’s fast growth in electric car market is a red flag for Korea

China’s fast growth in electric car market is a red flag for Korea

Posted September. 02, 2016 07:17,   

Updated September. 02, 2016 07:32

한국어

China is leading Korea in the electronic vehicle market, by dominating the core sector of the fourth industrial revolution. According to the Korea Trade-Investment Promotion Agency and Hyundai-Kia Motors, China sold 122,678 electric cars in the country in the first half of this year, which is 164 times the number sold in Korea (745 units). Among the top 20 car makers in terms of sales were nine Chinese companies including BYD Co., BAIC Motor Corp. and SAIC Motor Corp.

China is followed by the U.S. (64,057 units). While the U.S. was a leader in innovation in new industries and other countries followed suit, the U.S. and China are fiercely competing in the electric motor market at the outset. This is the outcome of tax deductions and huge subsidies for electric cars by the Chinese government. Gas-fueled car makers such as BYD Co. focused on electric cars in that it believed it could compete on the level playing field in the new market, unlike the traditional gas-fueled automobile market. Chinese consumers rushed to buy electric cars, which have become cheaper than gasoline cars thanks to government subsidies.

Korea is the opposite. The Korean government made a wrong forecast, believing that the electric car market would grow slowly. As Hyundai Motor and Kia Motors focused on gasoline and hydrogen cars, it is not easy to change their assembly line. The refinery industry claims that the era of electric cars would threaten their existence. Though Jeju Island was designated as a regulation-free zone for electric vehicles at the end of last year, the special bill failed to pass the National Assembly, losing momentum. As the privileged cartel – politicians, the government, and the industry – resisted embracing changes, Korea is on the brink of collapse in the global competition, let alone seeing an improvement in the “nutcracker” situation.

The fact that Korea failed to grow the electric car market despite its world-class technology in electric batteries indicates the failure of the government’s industry policies. The automobile market is in the midst of a major shift, as the mobile phone market that changed from feature phones to smart phones. It is hard to predict an increase in sales of electric cars in the circumstances where Korea’s electric car, once charged, can go only half the distance of that of U.S. automakers. If Korea fails to catch up the change, Korea will remain as a “slow chaser.”