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By Nam Hyun-woo
The Korean government is contemplating when it will finally call an end to the sales of combustion engine vehicles here. With the government considering setting the date as early as 2035, calls are growing for more caution as such an early change would force the automobile industry to completely change in just 15 years.
According to the National Council on Climate and Air Quality (NCCA), Monday, it will deliver its recommendation on the country's roadmap for its transition from internal combustion vehicles to eco-friendly vehicles to the government next month.
Before it submits its recommendation to the government, the presidential council will hold a public hearing session later this month to decide on the timeline of the country's sales ban on fossil fuel vehicles. The council said it is contemplating multiple timelines between 2035 and 2050.
Though the NCCA said it has not decided on the timeline yet, industry officials said the council is leaning toward selecting 2035 as the first year that sales of fossil fuel vehicles will be banned in Korea.
If Korea enters into a ban in 2035, the country could be one of the nations to commence an early phase-out plan. Norway, Austria and Belgium plan to phase out fossil fuel vehicles in the 2020s, but most automobile powerhouses are seeking to start the ban in the 2030s or later.
Among others, the U.S. and Japan are yet to come up with a plan regarding an internal combustion vehicle ban, despite being home to the world's largest automakers. Germany's Bundesrat, which is the upper house of the German parliament, in 2016 voted to outlaw new engine vehicles from 2030, but it is a non-binding resolution. China is also yet to come up with a plan for a nationwide sales ban.
Due to this, opinions are emerging that Korea's move to start the ban in 2035 could be too progressive, given the ban's impact on the domestic automobile industry, which accounts for a significant portion of the country's overall economic growth.
“The domestic automobile industries are all aware of the fact that the transition to eco-friendly vehicles is a juggernaut, and agree on the necessity to phase out fossil fuel vehicles,” a domestic automobile company official said. “However, the government should be more cautious in setting the timeline because an early ban could hurt the country's automobile supply chain.”
In recent years, domestic carmakers are striving to electrify their vehicles, making drastic changes in their future business strategies. Hyundai Motor Group plans to sell 1 million electric vehicles (EVs) in 2025 and to raise sales of eco-friendly vehicles to a quarter of its entire sales by then.
However, other carmakers such as GM Korea and Renault Samsung, are not able to make such strategic changes on their own, as they receive production volume from their overseas headquarters. Currently, GM Korea and Renault Samsung are importing electric vehicles, and have yet to set up long-term plans to produce electric or other eco-friendly vehicles at their plants here, meaning an early ban could result in serious damage to the companies' survival.
“It is not easy for carmakers to announce they will not make internal combustion vehicles, because they are currently financing their R&D for EVs with revenue from conventional engine cars,” another industry official said.
“It is especially so for small and midsize parts suppliers. In order to change their portfolio to eco-friendly vehicles, they have to make investments, but not many of them have the financial room for future investments. Thus, a cushioning period could be needed in order to contain the impact of the combustion vehicle ban.”