China has overtaken Germany as the leading exporter of electric vehicles (EVs) to South Korea, according to the latest data from the Korea Automobile Importers and Distributors Association (KAIDA). In October, Korea imported Chinese EVs worth a total of $172 million, more than double the imports from Germany, which only amounted to $70 million. This marks the third consecutive month that China has positioned itself as the leading exporter of EVs in Korea, showcasing its growing influence in the global EV industry.
One of the main drivers of China’s EV exports is the rising demand for new energy vehicles (NEVs), which include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEVs). China is the world’s largest producer and market of NEVs, accounting for more than half of the global sales in 2022. In the first three quarters of 2023, China exported 1.07 million NEVs, up 58% year-on-year, according to the China Association of Automobile Manufacturers (CAAM).
Some of the leading Chinese EV brands that have expanded their overseas presence include SAIC, BYD, NIO, Xpeng, and Li Auto. These companies have been investing in research and development, product innovation, and customer service to improve their competitiveness and reputation in the global market. They have also benefited from the government’s support and incentives for the NEV industry, such as subsidies, tax breaks, and preferential policies.
Korea emerges as a key market for Chinese EVs
South Korea is one of the fastest-growing markets for EVs in the world, with a penetration rate of 11.8% in 2022, ranking fourth globally. The Korean government has set an ambitious goal of achieving net-zero emissions by 2050, and has pledged to phase out internal combustion engine (ICE) vehicles by 2035. To support this transition, the government has allocated $2.6 billion for EV subsidies and infrastructure in 2023, and plans to increase the number of charging stations to 500,000 by 2025.
Chinese EVs have gained popularity among Korean consumers due to their affordability, variety, and performance. According to KAIDA, the average price of imported Chinese EVs was $33,000 in October, compared to $51,000 for German EVs and $46,000 for Japanese EVs. Chinese EVs also offer a wide range of models and features, catering to different preferences and needs. For instance, the MG ZS EV, the best-selling Chinese EV in Korea, has a range of 335 kilometers and a fast-charging capability of 80% in 40 minutes. The Tesla Model 3, the second-best-selling Chinese EV in Korea, has a range of 448 kilometers and a 0-100 km/h acceleration of 5.6 seconds.
China faces challenges and opportunities in the global EV market
Despite its impressive growth, China still faces some challenges and uncertainties in the global EV market. One of the main challenges is the fierce competition from other established and emerging players, such as Tesla, Volkswagen, Hyundai, and Toyota. These companies have also ramped up their production and innovation of EVs, and have strong brand recognition and loyalty in their respective markets. Another challenge is the potential impact of trade disputes, environmental regulations, and consumer preferences on the demand and supply of EVs. For example, the ongoing chip shortage, the rising cost of raw materials, and the environmental concerns over battery recycling could affect the profitability and sustainability of the EV industry.
However, China also has some opportunities and advantages to maintain and expand its EV leadership. One of the opportunities is the growing demand for EVs in emerging markets, such as Southeast Asia, Latin America, and Africa. These regions have huge potential for EV adoption, given their large population, urbanization, and environmental awareness. China has already established a strong presence and partnership in these regions, and could leverage its experience, expertise, and resources to further penetrate these markets. Another opportunity is the development of new technologies and business models, such as autonomous driving, smart mobility, and vehicle-to-grid (V2G) systems. These innovations could create new value and differentiation for the EV industry, and China has been actively investing and experimenting in these fields.