[Exclusive] Transition Team Does Not Set a Fixed Timeline for Phasing Out Internal Combustion Engine Vehicles

No Set Date for Phasing Out Internal Combustion Engines... Considering Industry Impact
Emphasis on 'Gradual Reduction'... Hyundai Motor and Kia Aim for Electrification by 2040
Ministry of Industry Aligns with Transition Team: "Gradual Implementation to Match Market Pace"

Ahn Cheol-soo, Chairman of the Presidential Transition Committee, Chung Eui-sun, Chairman of Hyundai Motor Group, and members of the Economic Subcommittee 1 of the Transition Committee are listening to an explanation about the Ioniq 5 electric vehicle robotaxi at the Hyundai Design Building of Hyundai Motor and Kia Technology Research Center in Hwaseong, Gyeonggi Province on the 8th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Sejong=Reporter Lee Jun-hyung] The Presidential Transition Committee has begun reviewing an exit strategy for the ‘phasing out of internal combustion engine vehicles by 2035,’ a pledge made by President-elect Yoon Seok-yeol. This is to minimize the shockwaves that the automotive ecosystem might experience during the process of phasing out internal combustion engine vehicles to achieve carbon neutrality. The industry argues that more bold support measures, including employment policies, are necessary as the automotive industry faces a paradigm shift that changes its foundation.

According to related ministries on the 25th, the Transition Committee is strongly considering not specifying a separate phase-out date for internal combustion engine vehicles in the national agenda. Previously, President-elect Yoon pledged to ban the registration of new internal combustion engine vehicles starting in 2035. In response, the Transition Committee reviewed the feasibility of the ‘2035 phase-out of internal combustion engine vehicles’ while communicating with domestic automotive industries as well as environmental organizations. A Transition Committee official stated, "Phasing out internal combustion engine vehicles by 2035 is physically challenging," adding, "If the sales ban date is fixed, sufficient support measures for the internal combustion engine vehicle ecosystem must also be in place."

The Transition Committee is not unaware of the necessity to phase out internal combustion engine vehicles. It is inevitable to phase out these vehicles to implement carbon neutrality goals such as the 2030 Nationally Determined Contribution (NDC). Major countries, including the European Union (EU), are also accelerating the phase-out of internal combustion engine vehicles.

However, the Transition Committee believes that a ‘gradual reduction’ is necessary to minimize damage to the industry. Since the domestic automotive industry is centered on internal combustion engines, forcibly phasing out these vehicles without support measures could cause a large-scale employment shock. According to a recent survey conducted by the Energy and Climate Policy Institute on 1,019 workers at completed vehicle manufacturers, commissioned by the environmental group Greenpeace, 9 out of 10 workers (89.3%) anticipated a reduction in automotive industry employment due to the shift to electrification. There is also concern about the closure of small and medium-sized parts suppliers that lack the financial capacity to accelerate business transformation.

The fact that the industry is preparing to phase out internal combustion engine vehicles by 2040 also seems to have influenced the decision. Hyundai Motor plans to stop selling internal combustion engine vehicles in major markets such as Korea and the United States starting in 2040. Kia has set 2040 as the year to achieve 100% electrification in its four major markets, including the United States, Korea, and the EU.

The Ministry of Trade, Industry and Energy shares the same stance as the Transition Committee. It is reported that the Ministry expressed concerns about the plan to ban new registrations of internal combustion engine vehicles starting in 2035 during a recent briefing to the Transition Committee. A Ministry official said, "If the government specifies the phase-out date, parts suppliers with a high dependency on internal combustion engines might immediately face bank loan restrictions," adding, "(Phasing out internal combustion engines) should be promoted gradually according to market readiness rather than artificially adjusting the year."

Experts unanimously agree that government support measures, including employment policies, should precede the phase-out. Professor Lee Ho-geun of the Automotive Department at Daeduk University said, "Support measures to maintain employment are important, but supplying the large amount of electricity needed for electric vehicle charging is also a problem," adding, "While electric vehicles are increasing, the share of thermal power generation is decreasing, so a stable power supply infrastructure must be established."