"2035 Zero-Emission Vehicle Target Unrealistic" Auto Parts Industry Urges Government to Moderate Pace

After Automakers, Parts Suppliers, and Academia, Parts Industry Issues Its Own Statement
Opposing 2035 NDC Zero-Emission Vehicle Supply Target
"Internal Combustion Engine-Focused Parts Industry Faces Existential Threat... Unachievable Goal"

The automobile parts industry has expressed concerns over the government's '2035 Zero-Emission Vehicle Supply Target,' stating that a more measured approach is necessary. Following last month's joint call for action by automakers, parts suppliers, and academia, the parts industry has once again urged policymakers to readjust the policy to better reflect current realities. They argue that, if the government proceeds as planned, more than half of the internal combustion engine-focused parts industry could face an existential crisis, making it urgent to set more realistic goals.

On October 13, the Korea Automobile Industry Cooperative Association (KAICA) issued a statement opposing the government's plan to promote zero-emission vehicles in the transportation sector as part of the '2035 Nationally Determined Contribution (NDC)' for greenhouse gas reduction. Taekseong Lee, Chairman of KAICA, stated, "We must face the realities of the parts industry and develop practical policies that consider the stability of the industrial ecosystem and employment."

The parts industry criticized the government's proposed target for zero-emission vehicle supply-8.4 to 9.8 million units, accounting for 30 to 35 percent of vehicle registrations-as excessive. The association argued that, to minimize industrial and employment shocks, the target should be adjusted to around 5.5 to 6.5 million units, or roughly 20 percent of registrations. Chairman Lee emphasized, "If the 9.8 million-unit scenario is implemented, sales of internal combustion engine vehicles would have to be virtually halted starting in 2034, but the business conversion rate of parts companies is less than 20 percent. Achieving this target is simply unrealistic."

Among the approximately 10,000 domestic parts companies, about half (45 percent) produce parts related to internal combustion engines, employing around 110,000 workers. The industry warned that "a rapid transition would inevitably lead to large-scale restructuring and employment instability," and expressed concern that "policies that fail to consider the ecosystem of internal combustion engine-focused parts companies could undermine the industrial foundation."

Furthermore, the industry stressed that, rather than a unilateral shift to electric and hydrogen vehicles, a variety of reduction technologies should be pursued in parallel, such as hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and e-fuels (carbon-neutral fuels). They argued that including HEVs and e-fuel vehicles, which are based on internal combustion engines, as carbon reduction measures would allow for a more gradual and stable transition for eco-friendly parts companies.

Finally, the parts industry called on the government to readjust its targets to better reflect reality and requested policy support, including: early allocation of the budget for the Special Act on Future Vehicle Parts Industry, expanded policy-based financial support for transitioning companies, stronger R&D support for future vehicle parts, and the introduction of tax credits for electric vehicle production.

Taekseong Lee, Chairman of the Korea Automobile Industry Cooperative Association (KAICA). Provided by KAICA