[China's Electric Vehicle Invasion] China Aiming for Global No.1... Changing the Competitive Landscape with Korea

[why&next] China's Electric Vehicle Surge Triggers Major Shift in Global Auto Industry Landscape
Chinese Local Firms Grow on Domestic Base → Expand Overseas Exports
Lagging in Internal Combustion Tech but Different in EVs
Korean EVs Surpass Japan, Compete with Chinese Makers in US and Europe

"Internal combustion engines couldn't catch up, but electric vehicles will be different." vs. "Chinese-made vehicles have yet to be proven on the global stage."

Perspectives on China's electric vehicle (EV) surge are divided. While some view China as having shifted early to EVs and built up capabilities, others believe there are still many shortcomings beneath the surface. China's EV industry has grown rapidly, backed by its vast domestic market, and is now preparing to expand globally. The global competition for leadership in the future mobility industry is also showing a different pattern than in the past. This article examines the background of China's EV success and explores future prospects.

Workers are assembling vehicles at BYD's electric bus factory in California, USA.

[Asia Economy Reporter Choi Dae-yeol] Among China's top three EV startups, Weilai (蔚來·Nio) recently began exporting its mid-size sedan EV, the ET7, to Europe, including Norway. Norway is known for its rapid EV adoption, with 8 to 9 out of every 10 new cars being electric, making it a fiercely competitive market for global manufacturers. Prior to Nio, Chinese EV makers such as Geely and Shanghai Automotive had already entered Norway, collectively holding nearly a 20% market share there. [Related Article] 'China's EV Invasion'

BYD, which competes with Tesla for the global EV market's top two spots, announced its entry into Japan last month and plans to rapidly expand its sales network. According to local media, BYD will sequentially release new models starting next year and aims to establish 100 showrooms across Japan by 2025. Japan is a market with strong domestic brand preference and various trade barriers, making it difficult for foreign automakers to enter. While competition would be tough for internal combustion engine vehicles, Japanese manufacturers are still inexperienced in the EV sector, giving BYD a competitive edge.

China is rapidly emerging as a competitor to South Korea in the global future mobility market. The main rival has shifted from Japan to China in major markets like the U.S. and Europe. This is the result of China building capabilities backed by its massive domestic market and policy support under the banner of an "EV surge."

As electrified models centered on EVs are expected to become the mainstream in the future, there is a growing sentiment among Chinese automakers that "unlike before, it is worth trying." South Korea's automakers are also being urged to revise their strategies to adapt to the rapidly changing landscape.

Chinese electric vehicle startup Xiaopeng's electric car P5

According to statistics from the Korea International Trade Association on the 26th, China's EV exports in the first half of this year amounted to $5.949 billion, an increase of over 130% compared to the same period last year. Until 2019, China's EV exports were less than $500 million, but they have multiplied several times annually since then, reaching $1.6 billion in 2020 and nearly $8.6 billion last year. EVs now account for about one-third of China's total passenger car exports.

The main countries to which China exports EVs are European nations with active EV adoption, such as Belgium (1st), the United Kingdom (2nd), Slovenia (3rd), Germany (4th), and Norway (6th). The United Arab Emirates (UAE), Australia, and the United States also rank high. Exports to South Korea reached about $70 million in the first half of this year, more than double the total volume of $31 million last year. Compared to the first half of last year, this represents an increase of approximately 630%.

Since the 2000s, China has surpassed the U.S. to become the world's largest automobile producer and seller. This was mainly achieved by attracting large-scale factories through joint ventures with local companies by American, European, Japanese, and South Korean automakers. While technology transfer from foreign automakers was also considered, catching up technologically in a short period was difficult. There were limits to narrowing the technology gap with foreign companies that had accumulated complete vehicle manufacturing know-how since the late 19th or early 20th century.

The situation was different for EVs. Since new markets emerged worldwide, the differences in technology and brand recognition were not significant. Lee Ho-jung, a senior researcher at the Korea Automotive Technology Institute, explained, "In the EV sector, Chinese companies boldly challenged advanced markets like Western Europe, where environmental regulations are tightening, by leveraging the fact that the brand power of existing internal combustion engine vehicles does not apply." He added, "They also adopted strategies such as reviving formerly famous brands like the British MG and Swedish Polestar or collaborating to absorb positive brand images."

China's largest private automobile company Geely's Geometry A electric car

In South Korea, imports of Chinese vehicles, especially commercial vehicles like buses and trucks, are rapidly increasing. According to Kaizyu Data, Dongfeng Sokon's small electric cargo truck Masada registered 808 new units domestically from the beginning of this year through last month, making it the best-selling imported commercial vehicle model. As of the first half of this year, imports of Chinese commercial vehicles reached 1,703 units, more than triple the same period last year.

Passenger car imports, such as models produced in Chinese factories under European brands like Polestar, also increased by about 84% compared to the same period last year. An official from the Korea Automobile Manufacturers Association said, "The share of Chinese-made electric buses accounts for 48%, and the market share of Chinese-made electric commercial vehicles with price competitiveness is expanding."

Competition between South Korean and Chinese companies in the EV market has intensified. While Hyundai and Kia were catching up with Japanese makers like Toyota, Honda, and Nissan in the internal combustion engine market, in the EV sector, many Chinese local brands are jointly challenging the South Korean brands that are slightly ahead. According to EU-EVS data, which tracks new EV registrations in 14 major European countries including Germany and the UK, Hyundai and Kia hold a 13.2% market share, ranking third after Volkswagen and Stellantis. Chinese manufacturers that joined later, such as Geely (4.2%), Shanghai Automotive (2.8%), BYD (0.2%), Nio, and Xiaopeng (each 0.1%), have rapidly increased sales this year.

Professor Lee Ho-geun of Daeduk University said, "There may be some hesitation due to the prejudice against 'Chinese-made' products, but if quality issues such as fires are smoothly overcome in overseas markets, they have the potential to be sufficiently competitive."