Chinese-made electric buses exceed Korean ones in 2023

[Photo by Han Joo-hyung]

The number of Chinese-made vehicles sold exceeded the number of Korean-made vehicles in South Korea’s electric bus market for the first time in 2023.

Despite the Korean government’s subsidy cut for Chinese buses, the significant price difference kept Korean electric buses at a disadvantage in the market. With the Korean bus market shrinking and electric buses gaining popularity, Chinese electric buses are swiftly dominating the South Korean market.

According to data from the Ministry of Land, Infrastructure, and Transport and the Korea Automobile Manufacturers Association (KAMA), the total sales of new electric buses in Korea in 2023 totaled 2,815 units and Chinese-manufactured buses accounted for 1,522 units, or 54.1 percent. The Chinese market share was only 23.9 percent up until 2019, marking a substantial increase each year until ultimately topping the 50 percent mark in 2023.

The driving force behind the success of Chinese electric buses in the South Korean market lies in their affordability compared to counterparts produced in Korea.

In regions like Gyeonggi Province, bus companies receive a subsidy of up to 112 million won ($84,000) for each electric bus they purchase. With the Ministry of Environment’s subsidy (70 million won) and the Ministry of Land, Infrastructure and Transport’s low-floor bus subsidy (92 million won), the government and local government subsidy totals 274 million won per unit. Korean electric buses are priced at around 400 million to 500 million won per unit, while those made in China are priced at around 300 million won. With the purchase subsidy, the cost for a Korean bus company to introduce a Chinese-made electric bus is less than half that of a domestically made bus.

As Chinese-made electric buses quickly dominated the local market with their low prices, the Ministry of Environment broke with its practice of uniformly subsidizing electric buses last year and began offering differential subsidies.

Despite the subsidy cuts, Korean bus companies have determined that the “price-performance ratio” of Chinese electric buses is better than domestic ones. And while the performance of Chinese-made electric buses falls behind that of Korean ones, the difference in quality between Korean and Chinese-made buses is not large enough to justify paying twice as much for domestic ones.

Comparing buses with the same battery capacity, Korean electric buses using Nickel-Cobalt-Manganese (NCM) batteries charge faster and have longer ranges than Chinese electric buses using Lithium Iron Phosphate (LFP) batteries. But bus companies prioritize distance over battery efficiency, as route buses follow predetermined paths for specific durations.

The Korean electric bus market expanded more than fivefold from 532 units in 2019 to 2,815 units in 2023. The share of electric buses in the overall new bus market increased from 1.3 percent in 2019 to 10.7 percent that year, or a tenfold rise. The operational costs of electric buses are only a quarter of those of internal combustion engine buses, prompting bus companies to replace outdated diesel and compressed natural gas (CNG) buses with electric ones.

As Chinese-made electric buses become more prevalent in the Korean market, domestic automotive parts companies are facing a crisis. While they hope for increased demand for electric bus components due to electrification, the dominance of Chinese products in the market raises concerns about these companies’ survival.