A company in Chilgok, North Gyeongsang Province, that supplies electric vehicle parts to Tesla and Volvo is currently considering additional imports of Chinese molds. As Tesla intensifies cost-cutting pressures even on its third and fourth-tier suppliers, the company has decided to lean towards using Chinese molds instead of domestic ones.
The company's representative stated, "Every time the vehicle model changes, we need to either create new molds or modify existing ones, so we are looking into affordable Chinese options. Currently, we use domestic frames, but the price of Chinese molds is less than half, making it hard to ignore their imports."
The influence of Chinese parts in the domestic automotive parts market is growing. In response to cost-cutting pressures from automakers, parts suppliers are increasing their reliance on Chinese components. According to data from the Korea Customs Service, imports of Chinese automotive parts reached $2.38955 billion from January to September this year, an 8.9% increase compared to the same period last year. During this time, Chinese parts accounted for 49.4% of the total automotive parts imports, which amounted to $4.8417 billion.
The increasing influence of Chinese capital on domestic automakers during the electrification process is also contributing to the rise in the share of Chinese parts. Renault Korea's purchases of vehicles, parts, and technology from China's Geely Group surged 82% year-on-year to 952.7 billion won last year. KG Mobility (KGM), which recently began developing the next-generation mid-size plug-in hybrid SUV 'SE10', paid $84 million to China's Chery Group this year. Hyundai Motor is strengthening cooperation with local Chinese parts suppliers while reducing the price of its electric vehicle Ioniq V to around 20 million won for the Chinese market.
The high dependence on Chinese automotive parts is evident in key items. According to a report published by the Bank of Korea in July titled 'Major Manufacturing Production and Supply Chain Map of Our Country', the share of Chinese imports in automotive chassis was 100% last year. Other components such as body (99%), air conditioning (95%), wheels (91%), windows (87%), other vehicle parts (85%), and airbags (80%) also show overwhelming shares of Chinese imports.
These parts are commonly used in both internal combustion engine vehicles and electric vehicles. Generally, the number of parts required for manufacturing electric vehicles is about half that of internal combustion engine vehicles. While internal combustion engine vehicles contain around 30,000 parts, electric vehicles are known to have around 15,000 parts. Many core components, such as engines, where Chinese products are comparatively inferior, are unnecessary. As a result, the faster the electrification pace in the automotive industry, the greater the opportunity for cheaper Chinese parts to penetrate the market.
The representative of a second-tier supplier in the Daegu area, affiliated with Hyundai Motor Group, expressed concern, stating, "The number of parts is decreasing, but first-tier suppliers are being pressured to lower their prices by 20% from automakers. It has become a situation where we cannot survive without using cheaper Chinese parts."
* This article has been translated by AI.
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