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Is Korea overreacting to Tesla CEO's lip service?

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President Yoon Suk-yeol waves his hand during a teleconference with Tesla CEO Elon Musk at the presidential office in Seoul, Nov. 23. Courtesy of the presidential office
President Yoon Suk-yeol waves his hand during a teleconference with Tesla CEO Elon Musk at the presidential office in Seoul, Nov. 23. Courtesy of the presidential office

Municipal governments compete to attract US firm's EV plant

By Park Jae-hyuk

Competition is heating up among municipalities to attract a Tesla Gigafactory to their regions, after the U.S. carmaker's CEO, Elon Musk, responded positively last month to President Yoon Suk-yeol's request to build an electric vehicle (EV) manufacturing plant in Korea.

Automobile industry experts, however, have remained skeptical about the feasibility of constructing the factory here, regarding the Tesla CEO's remarks as mere lip service.

During a teleconference on Nov. 23, Musk told Yoon that Korea is "one of the top choices" for his company's investments. The U.S. businessman also expressed a commitment to investing in Korea's EV charging infrastructure, according to the presidential office.

"By organizing a taskforce comprised of officials from the Ministry of Trade, Industry and Energy and the Korea Trade-Investment Promotion Agency (KOTRA), the government will work closely with Tesla to attract its investments," Choi Sang-mok, senior presidential secretary for economic affairs, told reporters on the day of the teleconference.

A day later, the Goyang City Government in Gyeonggi Province announced its plan to attract the Tesla Gigafactory by providing tax benefits and easing regulations. The city government said it will capitalize on its proximity to Korea's western ports, international airports and the capital of Seoul, which will likely demand more EVs.

"We will work closely with the central government, universities and economic institutions so that our city can be designated as a free economic zone and accommodate the Gigafactory," Goyang Mayor Lee Dong-hwan said.

Gangwon Province Governor Kim Jin-tae also said in a press conference on Nov. 28 that the province asked Tesla Korea on Nov. 23 to consider building an EV factory in the region.

"When I met with Tesla Korea Country Director Kim Kyung-ho in July, I asked his company to build more EV charging stations in our province," the governor said. "In response, Tesla CEO Elon Musk expressed his intention to invest in Korea's EV charging infrastructure."

The Pohang City Government in North Gyeongsang Province also formed a task force to convince Tesla to build a factory in the southeastern port city. The municipal government sent its officials to the trade ministry on Nov. 30 to express its intention to accommodate the U.S. firm's plant.

As the home of POSCO's main steel mill, the Pohang City Government emphasized an easier supply of steel plates and relaxed regulations on battery recycling in the city. It also seeks to take advantage of its proximity to the eastern port and R&D facilities, such as the Pohang University of Science and Technology (POSTECH) and Apple Developer Academy.

"Pohang has a steel cluster led by the world's leading steelmaker, POSCO, and a battery cluster consisting of POSCO Chemical, EcoPro, Samsung SDI and LG Energy Solution, so there is no better place than Pohang to accommodate Tesla's factory," Pohang Mayor Lee Kang-deok said.

Tesla's Gigafactory in Shanghai is seen in this 2019 file photo. Reuters-Yonhap
Tesla's Gigafactory in Shanghai is seen in this 2019 file photo. Reuters-Yonhap

Daelim University Division of Automotive Engineering professor Kim Pil-soo, however, expects Tesla to prefer building its Gigafactory in Southeast Asia, due to the region's rich deposits of minerals for EV batteries and Korea's militant labor unions.

The U.S. firm is reportedly considering establishing Asia's second Gigafactory ― which follows the first one in Shanghai ― in either Korea, Indonesia, Malaysia or Thailand.

"What Musk hates most is labor unions," the professor said. "Labor costs are more expensive in Korea than in Southeast Asia. In addition, Tesla will seek to sell vehicles produced in its second Gigafactory to Southeast Asian nations, so it would be better for the company to just import batteries from Korea."

Amid the skeptical outlook, Reuters reported on Nov. 29 that Yoon said in an interview that "he told Musk that the goal of his labor policy is to establish the rule of law to eliminate the risks of unfair labor practices."

The trade ministry said it will have talks with municipal governments on the matter of making their regions more appealing to Tesla.

A Tesla Korea official declined to comment on this issue. Tesla currently does not have a public relations (PR) team responding to media inquiries both in the U.S. and Korea, as Musk disbanded the team a couple of years ago.
Park Jae-hyuk

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