South Korea's Electric Vehicle Exports Decline Amid Chinese Competition

South Korea's electric vehicle export competitiveness has sharply weakened over the past two years, resulting in a loss to China. If this trend continues, South Korea's electric vehicle export value is expected to decline by over 2 trillion won by 2030.

The Korea Economic Association revealed these findings in a report titled 'Current Status and Implications of South Korea's Electric Vehicle Exports and Competitiveness' released on November 4.

South Korea's share in the global electric vehicle market is gradually decreasing. Its domestic market share fell from 73.7% in 2019 to 57.0% last year, a drop of 16.7 percentage points. In the overseas market, the share also decreased from 8.9% to 4.6%, a decline of 4.3 percentage points during the same period.

The country's export competitiveness is also diminishing. China, which was a net importer until 2017, transformed into a leading exporter by 2020. The Trade Specialization Index (TSI), which indicates whether a country is more specialized in exports or imports, surged for Chinese electric vehicles from 0.79 in 2017 to 0.97 last year. A TSI above zero indicates a strong export specialization.

In contrast, South Korea's electric vehicle TSI dropped from 0.70 in 2023 to 0.50 last year. During the same period, the TSI for non-electric vehicles increased from 0.63 to 0.71, highlighting a significant decline in export specialization for electric vehicles.

The Korea Economic Association expressed concern that if the trend of increasing Chinese electric vehicle export share continues, approximately 2.2 trillion won of South Korea's electric vehicle export value could be at risk by 2030. This figure represents 14.7% of last year's export value.

Lee Sang-ho, head of the Economic Division at the Korea Economic Association, stated, "The Chinese electric vehicle industry is rapidly seizing the future automotive market, thanks to strong government support. We need to consider policy support measures, such as domestic production tax credits, to expand our electric vehicle production base."