Chinese Cars Priced Around 40 Million KRW to Land in Korea Next Year... BYD "We Are a Technology Company" [Premium Chinese Product Invasion]

The increase in imports of Chinese-made cars is largely due to foreign brands adjusting their portfolios by exporting production volumes from their Chinese factories to Korea. Tesla, which used to import Model Y vehicles made at its U.S. factory to Korea, shifted production to its Shanghai plant last year. European automakers such as BMW, Mini, Volvo, and Polestar also export some models made in Chinese factories to Korea. Additionally, demand for Chinese-made commercial vehicles like buses and trucks remains steady.

BYD exhibition booth at the Automechanika fair held in Frankfurt, Germany last September. Photo by Yonhap News

High-End Chinese Cars Arriving One After Another

One notable aspect of the increasing imports of Chinese-made cars is the rise in the unit price per vehicle. Among the imported volume, electric vehicles, which make up the majority, saw their unit price increase from around $15,027 in 2022 to $28,923 last year, and $31,453 this year. Considering the significant price difference per vehicle, even when examining the import price per unit weight for all cars, it rose from $5,608 per ton in 2020 to $12,840 per ton this year, more than doubling in four years. This indicates that the import structure is shifting toward high value-added products rather than simply cheap Chinese products entering the domestic market.

The Chinese car offensive is expected to intensify further next year. This is because not only foreign brands with Chinese origins but also local Chinese passenger car brands will be launched in Korea. BYD, which surpassed Tesla to become the world's number one electric vehicle manufacturer, has officially announced its entry into the Korean market. It will establish a separate branch and dealer network in Korea. Geely Auto's high-end brand Zeekr, and Lynk & Co, which has joint ventures with foreign automakers and is actively pursuing overseas expansion, are reportedly reviewing market conditions with the premise of entering Korea.

While Chinese products in the past approached consumers mainly with mid-to-low price and cost-effectiveness, the passenger cars to be released in the future are likely to show a somewhat different pattern. Liu Xueliang, General Manager of BYD's Asia-Pacific Automotive Division, who recently invited Korean reporters to BYD's headquarters in Shenzhen, said, "Our strength lies in possessing a complete overall technology system," adding, "It is difficult to simply describe our positioning in Korea as either high-priced or low-cost."

Although the models to be launched domestically have not yet been disclosed, the industry expects that one of the main models, the mid-size sedan Seal, will be priced around 40 million KRW.

Professor Lee Hyun-tae of Seoul National University's Graduate School of International Studies said, "China has been intensively investing in advanced industries such as electric vehicles, solar power, and semiconductors for a long time, and the effects are gradually emerging. Since domestic demand is sluggish, they need to find a way out through exports," adding, "Unlike the U.S., which is strengthening protectionism, China emphasizes the necessity of free trade and is sending conciliatory gestures to Korea, which can be understood in a similar context."

On the 28th, a visitor is examining a vehicle exhibited by Geely Group at the China International Supply Chain Expo. Photo by Yonhap News

Integration of Advanced IT Technology... Changed Status of China

China has well-established battery technology and ecosystems that determine electric vehicle performance. This is why it is considered advantageous in the transition to electrification. Among the 17 automotive sector lighthouse factories announced by the World Economic Forum (WEF) over the past five years, 10 are located in China. Advanced information technology (IT)-integrated automated processes are widely applied, and the use of artificial intelligence (AI) and machine learning to implement parts modularization is highly regarded.

Recently, China has also been recognized for its software (SW) competitiveness. Baidu's robo-taxi call volume has far surpassed that of its U.S. competitor Waymo. In the digitalization ranking of automotive companies released by consulting firm Gartner, Chinese electric vehicle startups Nio and Xiaopeng ranked 2nd and 3rd respectively, following Tesla.

Additionally, among the top 10 companies, four are Chinese firms, including Geely (6th) and BYD (7th). Given their relatively short history, they have rapidly absorbed the latest technologies and integrated them throughout company management. The industry expects that software competitiveness will determine success in future mobility industries such as connectivity and smart cars.

NIO electric vehicle showroom in Beijing, China. Photo by Yonhap News

Hyundai Motor Group, which is relatively well-regarded among internal combustion engine automakers for its response to electrification, has also changed its perspective on China. While it used to be seen mainly as a huge domestic market, recently, trends and technologies identified at local research centers are being applied back to Korea and other overseas markets.

The extended-range electric vehicle (EREV) currently under development for release the year after next was inspired by China, and various aspects related to user experience (UX) are also being examined. Hyundai Motor Group has appointed a Chief Technology Officer (CTO) in China and is simultaneously operating a technology research center, an advanced digital research center, and a commercial technology research center.

Within the domestic automotive industry, there is a strong sentiment of "let's wait and see" regarding Chinese passenger cars, which will become more prominent starting next year. A representative from a domestic automaker said, "Although many domestic consumers hold anti-China sentiments, this is unlikely to apply to potential electric vehicle demand segments," adding, "We plan to respond after seeing which specific models will be imported and at what price points."