Recently, South Korea's new energy vehicle market ushered in an important milestone: the proportion of new energy vehicle registrations reached double digits for the first time. This achievement not only marks a new stage in the development of South Korea in the field of new energy vehicles, but also reflects the rapid growth trend of the global new energy vehicle market. South Korea is in the midst of a green transition driven by technological innovation and policy support. In the face of increasingly severe environmental pressure and competition in the international market, South Korea has shown strong growth momentum in the field of new energy vehicles. China Exportsemi will comprehensively analyze the development path of South Korea's new energy vehicle industry from the aspects of market status, policy incentives, technological innovation, industry trends and future challenges, and make a forecast for the market prospect in 2025.
1. Market Status and Growth Trends
According to the latest data from the Ministry of Land, Infrastructure, Transport and Tourism, as of October 2024, the cumulative number of hybrid vehicles registered in South Korea has reached 1.925 million units, and it is expected to exceed 2 million units by the end of the year. This breakthrough achievement shows that the South Korean hybrid vehicle market is steadily expanding. Looking at the annual data, the number of hybrid vehicle registrations increased from 104,000 units in 2019 to 372,000 units in 2023, and is expected to reach 458,000 units in 2024, a year-on-year increase of 23%.
In addition, the market for battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) is also growing rapidly. According to the Korea Institute of Energy Economics, electric vehicle sales increased by 17.3% year-on-year in the first half of 2024, further boosting the penetration of new energy vehicles in the Korean auto market.
Figure: For the first time, the proportion of new energy vehicle registrations in South Korea reached double digits
2. Policy support and market incentives
The South Korean government's policy incentives have played a crucial role in the expansion of the new energy vehicle market. South Korea's new energy vehicle development plan has a clear goal: by 2030, the number of electric vehicles will be 4.2 million, and the annual production target will be 3.3 million units. This plan includes the following core measures:
1. Purchase subsidy policy: By 2024, electric vehicles priced at KRW 55 million or less will receive full subsidies, with a maximum subsidy amount of KRW 6.5 million. The subsidy for models priced between KRW 55 million and KRW 85 million will be cut in half.
2. Power battery industry support: The government plans to secure at least 60GWh of local battery production capacity by 2025, and build a world-leading battery industry chain through tax incentives and technical R&D funding support.
3. Infrastructure construction: In 2024, it plans to add 10,000 public charging piles to a total of 85,000 units, and promote high-power fast charging equipment to meet the needs of long-distance driving.
4. Technological innovation: the core of driving industrial upgrading
South Korean companies continue to maintain a leading position in the research and development of core technologies for new energy vehicles, especially in lithium-ion battery and solid-state battery technology. The next-generation battery developed by Samsung SDI and LG Energy Solution not only improves energy density, but also achieves an efficiency of fast charging to 80% in 30 minutes. These technological advancements have significantly enhanced the range and market competitiveness of South Korea's electric vehicles.
Hyundai Motor Group aims to achieve an annual production capacity of 1.51 million electric vehicles in Korea by 2030, of which 920,000 will be exported to Europe, the United States, and Southeast Asia. The strategy aims to further strengthen its leading position in the international market by optimizing the powertrain, lightweight design and connected technologies.
5. Industry Trends & Challenges
Despite the strong market growth, South Korea's NEV industry also faces some significant challenges:
1. Charging infrastructure bottlenecks: The construction of charging piles around the world is slowing down. In 2024, the annual growth rate of global charging piles is expected to drop from 60% in 2023 to 30%. In South Korea, insufficient coverage of charging stations in remote areas persists, which could affect the widespread adoption of electric vehicles.
2. Fluctuating market demand: In the second half of 2023, demand for electric vehicles in South Korea declined slightly. In response to consumers' increasing sensitivity to cost-effectiveness, Hyundai and Kia plan to increase their efforts to develop hybrid models and introduce more affordable models.
3. Intensified international competition: As Chinese and U.S. companies continue to expand in the global NEV market, South Korean companies face stiff competition from brands such as BYD and Tesla.
4. The global trend of delisting of fuel vehicles and opportunities for Chinese manufacturers
Globally, the delisting of fuel vehicles is steadily advancing. The UK plans to ban the sale of gasoline-powered vehicles by 2030, while most EU member states have set a target for around 2040, and Norway plans to take the lead in achieving this goal by 2025. This trend presents an important opportunity for China's new energy vehicle companies.
Chinese automakers such as BYD and NIO are actively exploring international markets, including South Korea, through technological innovation and cost advantages. According to the data, BYD has sold nearly 20,000 new energy vehicles in the South Korean market in 2024, a year-on-year increase of 45%. In the future, with the deepening of cooperation between China and South Korea in the field of battery supply chain and intelligent network technology, Chinese companies are expected to further increase their market share in South Korea.
5. Future outlook
South Korea's new energy vehicle market will continue to grow, driven by a combination of policy, technology and market demand. It is expected that by 2025, the number of new energy vehicles registered will increase to 2.83 million units, accounting for more than 30% of new vehicle sales. In addition, as the South Korean government continues to promote its carbon neutrality strategy, the role of new energy vehicles in reducing transportation emissions will become more significant.
In the long term, South Korea needs to further optimize its charging infrastructure, strengthen international cooperation, and enhance its global competitiveness in the fields of intelligent driving and new energy technologies. Chinese companies can take advantage of this opportunity to jointly promote the prosperity of the East Asian NEV market through cooperation with Korean local brands.
6. Conclusion
The rise of South Korea's new energy vehicle market is the result of a combination of policy support, technological breakthroughs and market demand. Under the wave of global delisting of fuel vehicles and new energy transformation, South Korea is expected to set a benchmark in East Asia. At the same time, Chinese enterprises can find more opportunities for cooperation and development in this process, and help the full realization of global green mobility.
