Korea begins taking EVs serious
Government, automakers and infrastructure builders finally talk details
By Kim Da-ye
Last year, domestic automakers unveiled their first electric vehicles (EVs), announcing they would commence mass-production in two to three years.
Such enthusiasm may have come across as a publicity campaign to flaunt an environment-friendly image because the country still severely lacks the proper infrastructure to charge the vehicles for expansive use and an adequate financial aid plan.
A series of recent initiatives by companies and the government, however, indicate that Korea is gradually taking eco-friendly technology seriously.
Hyundai Motor Group, basically composed of the country’s two largest automakers, Hyundai Motor and Kia Motors, said on Sept. 28 that it plans to make compact EVs, not just small ones. Hyundai unveiled its first EV, the BlueOn in September one year ago.
Compact vehicles such as Hyundai’s Avante and Kia’s Forte are only one tier smaller than mid-size sedans like the Sonata.
Kia will begin mass-producing a mini-cross utility vehicle (CUV) called the TAM before the new year begins and aims to roll out a new compact EV by early 2014 while Hyundai will do so in late 2015, according to the group.
Hyundai-Kia said in a statement, “Considering the limit in battery technology and prices, we have started with relatively economic and small EVs.
“As the global market for eco-friendly cars settles and the battery technology improves, we forecast the mainstream segment of EVs will be the compact class, so we will push forward with developing compact EVs.”
General Motors and its Korean unit, GM Korea, announced on Oct. 13 that the firm will begin selling fully electric Chevrolet Sparks globally in 2013.
GM has so far pursued hybrid technology. It has sold the plug-in hybrid EV Volt and applied the eAssist mild hybrid system to various vehicles including the Alpheon.
While hybrid vehicles are partly gasoline-fueled, all-electric cars are powered by the battery alone.
Not to be left out, Renault Samsung said on Sept. 29 that it has deployed five SM3 EVs in the Jeju Smart Grid Test-Bed, the site in Jeju Island for testing the information technology-integrated power grid designed to optimize energy efficiency.
The Korea arm of the French auto giant aims to mass-produce the electric version of the SM3 model by the end of 2012.
“Korean companies had been just monitoring the situation. But we can see they have begun responding, keeping close tabs on fast-changing trends in the global market,” Andy Bae, a senior analyst of Pike Research, as well as the head of its Korean branch, said.
What has made EV the buzz word of the auto industry again?
A GM Korea official suggests the government’s leadership.
The Ministry of Knowledge Economy said on Oct. 12 that EV buyers will be exempted from taxes worth up to 4.2 million won from 2012 while setting the guidelines for the specific requirements.
Both low-speed and high-speed EVs need to have an energy efficiency of five kilometers per kilowatt hour (kWh).
Low-speed EVs need to run 27 kilometers or more per full charge and their maximum speed must reach 60 kilometers per hour. High-speed EVs should drive 82 kilometers or more per charge and accelerate above 60 km/h. The speed limit on highways is between 50 and 100 km/h.
On Tuesday, the ministry posted a wanted ad for businesses to join the “CarSharing” project, which involves people renting EVs from designated bays in the Seoul metropolitan area by the hour.
With a budget of 3.5 billion won, the government will select bidders in November, implement the system and charging stations by June 2012 and commence operations by July. Each bay is expected to have one quick charger and four slow ones.
The knowledge economy ministry said that there have already been car sharing programs in Europe and the United States and that France will start one this December with 66 EVs called “BlueCars” and 33 bays.
“At the same time, we will develop mass-market chargers that suit the domestic housing environment,” the ministry added.
“Considering 71.6 percent of the population live in apartments, the mass-market chargers would have multiple ports.”
Joo Young-joon, the director of the ministry’s automobile & shipbuilding division, said on the phone that the government is executing the plan step by step as scheduled, when asked if any favorable factors in the sector compelled it to speed up its initiatives.
“Recently in Japan, Panasonic unveiled a system that completes charging of EVs in 10 minutes, and we believe soon technological limits will disappear,” said Bae.
Experts, however, say that the EV sector needs more support to take off.
Kim Pil-soo, a professor at Daelim University and an advisor to most Korean automakers, said in his weekly note that the core problem with the government’s support plan is the absence of subsidies. Kim distinguishes subsidies from tax exemption.
Kim argues that a gasoline-fueled car of the Hyundai BlueOn’s size costs around 10 million won. A small EV is priced at around 40 million won, meaning the price gap between a gasoline-fueled and the battery-powered vehicle is some 30 million won. A tax exemption worth 4.2 million won would only reduce the difference by a small margin.
“Considering the many drawbacks of EVs, there are few individuals that will buy them at that price,” Kim said.
“There should be subsidies that are at least as much as those given in advanced countries to convince consumers choosing EVs.”
Japan gives EV buyers about 19 million won in subsidies alone, compared to 10 million won in the United States and 8 million won in China, according to the professor.
Kim estimates that the government will have to subsidize about 20 million won including tax exemptions per car. “That requires an astronomical budget,” he said.
Electric vehicles also demand an extensive network of charging stations.
Korea made progress in June when the Korean Agency for Technology of Standards (KATS) amended two industrial standards and created one for setting up a charging infrastructure.
The Korea Environment Corporation (KECO) announced in September that it will set up 204 quick and slow chargers this year in public companies and central and municipal governments.
The consortium consisting of LSIS, Hyosung and PNE Solution won the bid for KECO’s project.
Mike Arcamone, the president of GM Korea, said that Korea has an ideal environment for establishing a charging infrastructure.
Unlike the United States and European countries, apartments and houses are continuously being built in Korea and charging facilities could be easily integrated into new buildings, according to Arcamone.
EV sector needs government's leadership
Colorado-based Pike Research, which focuses only on green technology, opened its Asia Pacific branch in Korea in April. The Seoul office is Pike’s third international branch after London and Washington, D.C.
The Korea Times interviewed Andy Bae, a senior analyst of Pike Research, as well as the head of its Korean branch about the status of the Korean EV sector in the global market.
Please compare Korea’s EV industry to those in other countries.
We forecast about 30,000 electrified vehicles ― including hybrids and full EVs ― will be sold in Korea in 2012, compared to 250,000 in China and 380,000 in Japan. Korea isn’t their rival yet, and needs good performances by major domestic firms.
From a global perspective, Korea’s relevant regulations, subsidies, investments in technology and society-wide interest in EVs are quite poor. Our neighbors Japan and China are focusing on expanding the market through many field tests.
What does Korea need to do?
To vitalize the market, relevant models should continue to be developed. After the launches of the vehicles, consumer responses matter, but their recognition of EVs faces many obstacles.
The regulations that allow electric facilities in large apartment complexes are necessary for installing high-capacity charging facilities. Consumer interest in public charging stations on the road seems to be low, so the industry is observing the situation before launching any projects.
I positively believe that strong leadership by the government or companies will solve any troubles related to preparation, public opinion and regulations.