S. Korea sees rapid increase in EV trade deficit with US, China this year

Tesla Model 3. [Photo by Tesla]

South Korea’s deficit in electric vehicle trade with its major trading partners the United States and China has sharply widened this year, raising concerns about Seoul’s aggressive electrification scheme to put 4.5 million EVs on roads by 2030 that has rapidly increased foreign EV imports, especially Tesla.

According to a report published by the Korea Automobile Manufacturers Association on Wednesday, the country’s exports of EVs from January to September reached $3.7 billion, taking up 10.8 percent of the total auto exports of $34.3 billion. Imports of EVs amounted to $1 billion, about 9.1 percent of the total car imports.

Overall EV exports exceeded imports, but the other way round in trade with the U.S. and China.

Up to September this year, Korea recorded a trade deficit of $512.03 million with the U.S. in the EV category, the largest among its trade partners. Against a year ago, the figure jumped nearly 10 times from $51.28 million.

The mounting deficit in EV trade with the U.S. is largely due to California-based EV giant Tesla, who sold total 16,287 units in Korea in the first nine months, taking up 33.4 percent of all domestic EV sales.

From China, Korea has imported more electric buses and micro EVs.

BYD"s electric bus "K9" [Photo by BYD]

Amidst the growing EV trade deficit, Washington and Beijing are planning to expand government subsidies for purchases of domestically produced EVs, while Seoul gives away 8 million won ($6,825.94) subsidies equal to all EV brands regardless of the country of their origin.

“If the country maintains the current aggressive electrification policy for 4.5 million units by 2030, the wider trade deficit would be inevitable given the country’s still weak EV ecosystem,” said Jeong Marn-ki, President & CEO of KAMA, urging the government to come up with measures like different subsidies to brands in terms of the country of origin and greater tax breaks for domestic R&D activities.

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