Chinese electric vehicles, whose sales have skyrocketed in the global electric vehicle market, are set to make a full-scale entry into the Korean market.

• BYD, the global sales leader, and Geely, ranked third, are preparing to launch passenger cars in the Korean market.

  • They are preparing small hatchbacks (Dolphin) and small SUVs (Atto3, Zeekr X) with price competitiveness, as well as mid-size sedans (Seal, Zeekr 001) as high-end models.

• Due to the Chinese government's policies for industrial promotion, the Chinese domestic market is experiencing oversupply, leading to rapid growth in exports to the global market.

  • With subsidies and R&D support that drives a surge in electric vehicle and battery supply, China’s global EV sales are rapidly increasing to exceed its domestic demand.

• Following the pandemic, rapid export growth has increased market share, posing a threat to the survival of existing manufacturers, including plant closures.

  • Volkswagen's decision to close its first production plant in Germany, and Chinese electric vehicles overtaking Japan to become the market leader in the ASEAN market

Success factors for Chinese electric vehicles in the global electric vehicle market

• High price competitiveness

  • Achievement of economies of scale through domestic market expansion via subsidies until 2022, low labor costs, and domestic production of battery materials to maintain price competitiveness

• Diverse product lineup

  • Production of various models in the small and mid-size segments preferred by consumers entering the growth phase of electric vehicle adoption

• Localization strategy leveraging emerging countries' policies to attract electric vehicle production facilities

  • Utilizing tax incentives, purchase subsidies, and other incentive policies in key ASEAN countries such as Thailand and Indonesia to establish regional supply chains and secure price competitiveness

Korean consumers' response to Chinese electric vehicles

• Korean consumers' brand preference and the high price competitiveness of domestic EVs

  • Since the pandemic, Korean consumers' loyalty to domestic car brands has reached its highest level, and the cost ratio of Korean EVs is expected to be lower than the overseas production cost of Chinese EVs

• Reduction in government subsidies and increasing concerns about the safety of Chinese batteries

  • Reduction in purchase subsidies for LFP electric vehicles and the spread of phobia caused by the recent fire accidents involving Chinese EV battery

Impact on the domestic industry

• The likelihood of threatening existing OEMs, as seen in Europe or Southeast Asia, is low

  • The influence of Korean consumers' perception of Chinese brands, safety concerns, and the relatively high price competitiveness of domestic OEMs

• The possibility of structural adjustments in the materials and parts supply chain remains

  • The parts and materials industry, which has lower competitiveness compared to OEMs, faces concerns about structural adjustments similar to the past restructuring of the steel industry due to the increased export of Chinese products.