Eco-friendly Car Exports 'Soar'...The Landscape of Automobile Exports Is Changing

From January to June This Year, Eco-Friendly Vehicle Exports Accounted for 20.1% of Total Automobile Exports, a Record High

[Asia Economy Reporter Hwang Yoon-joo] Recently, South Korea's automobile exports have slowed down, but exports of eco-friendly vehicles such as plug-in hybrids and electric vehicles have shown rapid growth.

According to the "Status of Eco-Friendly Vehicle Exports and Diagnosis of Our Competitiveness" report released on the 2nd by the Korea International Trade Association's International Trade and Commerce Research Institute, South Korea's eco-friendly vehicle export value increased from $3.6 billion in 2017 to $5.98 billion in 2019, and the share of eco-friendly vehicles in total automobile exports expanded from 8.6% to 13.9%. In 2019, South Korea ranked 4th in the world for electric vehicle exports and 5th for plug-in hybrid exports.

In the first half of this year, while the total automobile export value decreased by 27.3% compared to the same period last year due to the impact of the novel coronavirus disease (COVID-19), eco-friendly vehicle exports increased by 22.5%, maintaining a favorable trend. The share of eco-friendly vehicles in total automobile exports also reached an all-time high of 20.1%.

The export competitiveness of plug-in hybrids and electric vehicles has been continuously improving over the past three years. Looking at the Revealed Comparative Advantage (RCA) index, where a higher value indicates stronger export competitiveness, plug-in hybrids rose from 1.57 in 2017 to 2.32 in 2019, and electric vehicles increased from 1.55 to 3.18 during the same period, showing more than double the global competitiveness.

Driven by the increase in eco-friendly vehicle exports, electric vehicle battery exports also maintained a strong performance. In 2019, exports of electric vehicle batteries (lithium-ion batteries) reached $4.68 billion, ranking 2nd in the world after China.

The report stated, "Consumer interest in the environment is increasing, and the automobile industry is competing to develop eco-friendly vehicles, so competition among countries to dominate the eco-friendly vehicle market is expected to intensify further. South Korea still shows favorable export performance, and the government plans to focus on fostering eco-friendly vehicles, making the export outlook bright."

The report continued, "To strengthen the growth foundation of eco-friendly vehicles, both the private sector and government must work together on proactive investment and infrastructure development. In particular, it is important for the government to promote national technology development (R&D) projects linked to international standardization and to prepare a mid- to long-term mobility roadmap, including strengthening tax support for future vehicle technology investments." Additionally, expanding infrastructure for future vehicle technology testing, efficient operation of environmental regulations, and restructuring the business portfolios of automotive parts industries were identified as important tasks.

Shim Hye-jung, senior researcher at the Korea International Trade Association, said, "To secure global competitiveness in the eco-friendly vehicle and battery industries, it is important to industrialize the entire value chain beyond simple manufacturing and distribution of eco-friendly vehicles, including battery production, charging, and after-sales service (AS), to induce growth in the overall mobility industry."