"China's Carbon Neutrality by 2060, Ours by 2050... Excessive Regulations in the Car Industry"

[Asia Economy Reporter Choi Dae-yeol] Concerns have been raised that the automotive and mobility industries may fall behind in international competitiveness due to being stifled by regulations before a proper industrial foundation is even established. The industry argues that the legislative process itself, which has a high potential to act as a regulatory barrier, must be reformed to enhance competitiveness.

At a policy proposal seminar held by the National Assembly Mobility Forum on the 28th, Kim Yong-won, Head of Environment and Safety at the Korea Automobile Manufacturers Association, pointed out, "The automotive industry has been shrinking due to a combination of factors including the entrenchment of a high-cost, low-efficiency production structure, rapid climate change responses and environmental regulations without considering the industrial base, and China's expansion and growing influence in the global market."

He particularly noted that the problem worsened as the system failed to keep pace with the changing industrial environment. Kim said, "Compared to the 14th National Assembly, the 20th National Assembly has seen about a 66-fold increase in bills related to land, transportation, environment, and labor, most of which include regulatory provisions. The net cost of regulations in Korea has been continuously rising from 18.5 billion KRW in 2018 to 192.9 billion KRW in 2020, indicating the need for regulatory reform."

According to the Legislative Research Office and others, the United States requires regulatory impact assessments during federal Senate bill deliberations. Germany evaluates member-initiated bills in three stages: prior, concurrent, and post-assessment. South Korea currently has no regulatory impact assessment system.

He stated, "All proposed bills, whether government-initiated or member-initiated, should undergo regulatory impact assessments. Additionally, the appropriateness of existing related regulations should be evaluated to review and analyze whether they should be maintained. For this purpose, a provisional 'Regulatory Impact Review Committee' should be newly established within the National Assembly." He added, "The evaluation of legislative activities by members should shift from a quantitative assessment based on the number of bills to a qualitative evaluation focusing on the quality of legislation."

Used Car Export Complex in Songdo Recreation Area, Yeonsu-gu, Incheon City

Representative regulations that need to be revised include imposing fines on voluntary recalls, overlapping imposition of greenhouse gas fines and low-emission vehicle supply target contributions, and certification procedures for electric vehicle subsidies. He also emphasized the need for regulatory improvements to secure labor and production flexibility during the transition to future vehicles, as well as regulations related to the use of in-house subcontracted workers.

He diagnosed that the industrial base itself is collapsing due to the flood of regulations without properly considering the current situation. Various environmental regulations are a prime example. South Korea declared carbon neutrality by 2050 without considering its manufacturing-centered industrial structure or domestic carbon dioxide emission proportions, while China set its target for 2060.

There were cases where regulations adopted only by some competing countries were chosen or even stricter regulations were applied. For example, the emissions trading system is currently implemented only in parts of Europe, the United States, China, and some Japanese cities. The low-emission vehicle supply target system is applied only in China and some U.S. states. In contrast, South Korea imposes overlapping regulations, with two or three types related to carbon dioxide alone.

Professor Lee Kyung-soo of Seoul National University's Department of Mechanical Engineering, who gave another presentation that day, said, "For the development of the mobility industry, it is essential to nurture specialized companies in core component technologies, systems, and vehicle platforms. It is important to cultivate and secure world-class talent with the necessary core technologies in specialized companies."

He continued, "National research and development projects are being led by national research institutes and small and medium-sized enterprises, but collaboration among automobile manufacturers, SMEs, startups, and university research institutes is insufficient. Universities that train excellent master's and doctoral researchers need to establish a foundation to develop core technologies and nurture outstanding talent with international competitiveness through long-term planned research in cooperation with companies."

Hyundai Motor Company announced plans to expand and strengthen its platform in the next-generation mobility business. Kim Soo-young, Executive Director of Hyundai Motor's TaaS (Transportation as a Service) Division, said, "Shucle, a demand-responsive transportation service launched by Hyundai Motor's AIRS using AI algorithm-based real-time optimal route generation technology, has achieved significant results. We will develop an open platform through autonomous driving pilot operations within the Shucle platform and expand it into a high-quality public transportation service infrastructure by introducing MaaS, evolving it into a diverse future integrated service platform."

Jung Man-ki, Chairman of the Korea Automobile Manufacturers Association, said, "Recently, mobility is evolving not only towards individualization, where travel routes and means shift to demand-based due to electrification, high-speed, intelligence, and IT integration, but also towards integration that enhances connectivity between transportation modes. If we fail to keep up with this trend, we risk losing future growth engines. Therefore, we must boldly reform regulations by establishing a broad regulatory-free testbed to promote intelligence and individualization and activate shared vehicle services."

He added, "Foreign-invested companies in the automotive sector face unique Korean regulations such as the illegality of dispatched or replacement labor, which can lead to CEOs being banned from leaving the country or facing criminal charges. At a minimum, we hope that these unique regulations will be reformed to align with global standards so that our companies can compete on equal footing with foreign firms."