[Electric Vehicle Hegemony War] China Charging Ahead, US in Pursuit... Korea Shocked by Norilsk Incident

Why South Korea's Electric Vehicle Transition Is Delayed
Hyundai's Summer Launch Ioniq 6, Asan Plant Completes Production Facility Conversion
Labor Disputes Over Worker Numbers...Specific Production Timing Undecided
Kia Also Faces Conflict Over Gwangmyeong Plant...Union Prioritizes Future Job Security
China Leads with $8.6 Billion Export Volume...Market Dominated by 200% Annual Growth
Extensive Support Including Subsidy Policies
US Biden Strengthens Electrification Strategy and Japan's Toyota Invests Over 40 Trillion Won

[Asia Economy Reporter Choi Dae-yeol] The sedan-type electric vehicle Ioniq 6, which Hyundai Motor plans to launch this summer, has been allocated to the Asan plant. This plant, which has been producing the main models Sonata and Grandeur, recently completed equipment conversion for electric vehicle production. Although the plant is equipped for electric vehicle production and the Ioniq 6 is in the final stages of development, the exact production schedule is currently undecided. To mass-produce the new model, the company and the labor union must agree on the 'man-hours'?the number of workers assigned to the production line?but there is a significant disagreement between labor and management.

Electric vehicles have simpler processes compared to traditional internal combustion engines, inevitably reducing the required workforce significantly. Previously, during the mass production of Hyundai's first model applying the electric vehicle-dedicated platform E-GMP, the Ioniq 5, negotiations on man-hours to reduce the workforce by about 30% were delayed, causing the schedule to be pushed back by one or two months from the original plan.

As eco-friendly vehicles (electric and hydrogen cars) have become the trend in the global automotive market this year, major automakers worldwide have launched large-scale investments to secure market dominance. However, South Korea is being held back by labor unions and various government policies. With core technologies for the two pillars of future vehicles?eco-friendly vehicles and autonomous driving?lagging far behind major countries, concerns are rising that Korea's automotive industry's competitiveness could significantly decline due to union resistance and policies that run counter to global trends.

The concept car of the Ioniq 6, 'Prophecy' [Image source=Yonhap News]

Union's "Employment Stability First" Demand Delays Equipment Conversion

According to the completed vehicle industry on the 21st, Kia decided last November to convert the Gwangmyeong plant into an electric vehicle production base, but there has been little progress so far. Labor and management have met, but finding common ground has been difficult. Kia announced 'Plan S' in early 2020, signaling a transition to future mobility companies such as electric vehicles. Following the Gwangju and Hwaseong plants, the Gwangmyeong plant was selected as the third electric vehicle production plant.

The Kia labor union stated in a newsletter that "As the automotive industry undergoes a major transformation, powertrain sectors such as engines and transmissions are rapidly decreasing," and "We demand early deployment of core parts within domestic plants to ensure future employment stability for engine, transmission, and material plants, rather than Plan S aimed at process reduction and outsourcing of volume."

As processes previously handled by automakers have shifted to first-tier suppliers like Hyundai Mobis, workforce reductions have become inevitable, prompting union opposition. Experts point out that the situation of Hyundai Motor and Kia, which account for most domestic electric vehicle production, cannot be handled leisurely. China and European countries have already established mass production systems for electric vehicles, and advanced automakers in the U.S. and Japan, which had been dormant, are now actively engaging.

Professor Kim Pil-soo of Daelim University's Department of Future Automotive said, "The paradigm of the global automotive industry has already shifted to electric vehicles," adding, "Whether to accept this is not just a matter of competitiveness but directly linked to the survival of automakers."

He also added, "Not only Hyundai Motor and Kia but also foreign automakers with domestic production bases perceive Korea as having strong labor unions, which is disadvantageous for allocating new electric vehicle volumes. There are many restrictions due to positive-type regulations related to future mobility such as electric vehicles and autonomous driving, making it difficult for startups to emerge."

Last November, U.S. President Joe Biden visited General Motors (GM) electric vehicle production plant and was seen talking with Ray Curry, President of the United Auto Workers, and Mary Barra, Chairwoman of GM.

China Surges Ahead, U.S. and Japan Also Drive Electrification

While South Korea is held back by labor unions, major global countries are investing heavily in electric vehicles as a new growth engine. The most aggressive is China. According to statistics on electric vehicle export values by country, China's electric vehicle exports reached $8.596 billion last year, ranking among the top single countries alongside Germany and Belgium.

Until 2020, China was the 7th largest electric vehicle exporter and was outside the top 10 in the overall passenger car market including internal combustion engines. China's electric vehicle export value has increased by nearly 200% annually over the past five years, overwhelming major markets such as South Korea, the U.S., Japan, and Europe.

Akio Toyoda, President of Toyota Motor Corporation Japan, is announcing the electrification strategy in December last year.

Manufacturers such as SAIC Motor and BYD, which ranked 2nd and 4th in sales last year, are representative examples. Until four or five years ago, they sold around 100,000 units domestically, supported by subsidy policies, but last year they achieved economies of scale by selling over 600,000 and 300,000 units respectively.

Traditional automotive powerhouses like the U.S. and Japan are also sharpening their strategies. U.S. President Joe Biden has supported electrification strategies by directly visiting domestic automakers such as Ford and General Motors (GM) after taking office. Shortly after his inauguration, President Biden issued an executive order to investigate the supply chain of batteries, a key component of electric vehicles.

Competition to attract battery factories is fierce not only at the federal government level but also among state governments. Korea's three major battery companies?LG, SK, and Samsung?have decided to build or expand local factories, and China's CATL, the world's largest battery maker, is also considering entering the U.S. market. Toyota, the world's largest automaker, has announced an electrification strategy and plans to invest over 40 trillion won.