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Korean Industrial Insight No. 8 of AI, Semiconductors, Batteries and Electric vehicles |
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2025-01-02 |
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Ⅰ. AI INDUSTRY TRENDS
1. ROK and Japan ICT Policy Forum Working-level Meeting: Strengthening AI Cooperation
Meeting between South Korea's Ministry of Science and ICT and Japan's Ministry of Internal Affairs and Communications at director-general level
- Discussion on cooperation projects in AI, digital standardization, and Open RAN
The Ministry of Science and ICT (MSIT) of South Korea announced on the 13th that it held a Korea-Japan ICT (Information and Communication Technology) Policy Forum in collaboration with Japan's Ministry of Internal Affairs and Communications (MIC). The forum focused on discussing measures to strengthen cooperation in the ICT sector between the two countries.
This forum was conducted at the director-general level as a follow-up to the first Korea-Japan ICT Policy Forum (ministerial level), which took place in December of last year. The discussions focused on addressing subsequent actions and preparing the next meeting.
The MSIT reported that during the Korea-Japan ICT director-general level meeting, key cooperation topics such as AI (Artificial Intelligence), digital standardization, and Open RAN were discussed. The two countries agreed to strengthen collaboration on AI technologies and policies, as well as to share best practices regarding the implementation of global norms.
Notably, they plan to broaden the scope of cooperation in the AI sector by sharing examples of AI guidelines and other relevant initiatives.
Additionally, the two countries plan to strengthen private sector-driven, performance-based international standardization cooperation in the ICT field, while further solidifying collaboration between their standardization organizations to nurture standardization experts. This initiative is expected to further bolster the international standardization of digital technologies from both countries and enhance their competitiveness in the global market.
The discussions were also held regarding cooperation on Open RAN technology, with both countries agreeing to continue their collaboration to secure Open RAN capabilities and establish a foundation for entering the global market.
The International Cooperation Division of the MSIT stated, "Through this meeting, we have made preliminary preparations for the upcoming second ICT Policy Forum (ministerial level) scheduled for next year. We hope that this forum will further strengthen the forward-looking cooperative relationship between Korea and Japan in the areas of technological advancement and global technology standardization in the ICT sector."
2. Korean Telecom Companies Seek Transformation into AI Enterprises
Korean telecom companies are actively positioning themselves at the center of the AI innovation ecosystem through a combination of technological advancements and investments.
On the 5th, SK Telecom newly established an AI DC division. This initiative aims to focus on profitable areas by integrating technologies from its affiliate companies, such as next-generation semiconductors and environmentally friendly energy, with AI data center and GPU cloud services (GPUaaS). The strategy for building an 'AI Infrastructure Super Highway,' emphasized by CEO Ryu Young-sang, is expected to gain momentum.
SK Telecom is set to open an AI data center in Seoul this month in collaboration with U.S. GPUaaS company Lambda. The plan involves deploying Lambda's NVIDIA GPU resources at SK Broadband's data center in Gasan, Seoul. Lambda is a company that provides AI cloud services using the latest GPUs supplied by NVIDIA. SK Telecom aims to significantly expand the number of GPUs allocated to the AI data center, with plans to increase the count to thousands within three years, ultimately targeting the establishment of the largest GPU farm in the country. This month, the company will also launch a subscription-based AI cloud service that allows enterprise customers to borrow GPU resources through the cloud, leveraging Lambda's GPU assets. According to market research firm Fortune Business Insights, the global GPUaaS market is expected to grow from USD 4.31billion (approximately KRW 6.2trillion) this year to USD 49.84 billion (approximately KRW 71.58 trillion) by 2032, with a projected compound annual growth rate of 35.8%.
The company is also intensifying its efforts to penetrate the AI data center market. SK Telecom is equipped with not only a data center management system but also immersion cooling technology designed to reduce power consumption. In collaboration with U.S. AI data center solution provider SGH, the company plans to enhance cooperation across various infrastructure domains, including AI, data centers, edge, and future memory technologies. An industry insider noted, "As the complexity and difficulty of building AI clusters increase, there is a growing demand for specialized AI data center solution providers."
KT accelerates its efforts in AI semiconductors and AIDC initiatives.
Through an organizational restructuring planned for 2025, the company aims to enhance efficiency by integrating the "Strategy and New Business Division," which was previously responsible for AI convergence projects, into the "Enterprise Division," which oversees B2B operations. In particular, KT is expected to strengthen its AIDC business in collaboration with Microsoft. KT has invested KRW 33 billion in the Series B funding round of Rebellions, a domestic AI semiconductor design (fabless) startup that has re-emerged as a single entity through a merger with SAPEON. Rebellions has developed the neural processing unit (NPU) "Atom" in partnership with KT, contributing to the commercialization of KT Cloud's NPU infrastructure services.
KT operates a total of 13 IDCs across capital region and the provinces through its subsidiary, kt cloud. Recently, the company opened the Baekseok AIDC in Goyang, establishing an integrated operational system that connects its existing seven data centers in the metropolitan area, thus expanding its 'One DC' network. The upcoming Gasan and Gyeongbuk AIDCs, expected to be secured next year, are also designed to accommodate large-scale GPU.
LGU+ propels new IDC construction in Paju.
LG Uplus is actively investing in AI DC business. Following the opening of the Pyeongchon 2 center last year, the company has announced plans to construct a new IDC in Paju this year, focusing on expanding its AI and cloud-based data processing capabilities. The Paju IDC, scheduled for completion in 2027, is expected to become a representative hyperscale data center for the northern metropolitan area. The Paju IDC is planned to utilize renewable energy even from the design stage and will create an environment optimized for AI and big data services. An official from LG Uplus stated, "Data centers are essential infrastructure for the development of AI technologies and the expansion of cloud services. We will continue to provide the best data services through sustained investment and technological innovation."
Next year, investments are expected to be concentrated on AI infrastructure projects, such as IDC and cloud services, rather than on traditional capital expenditures (CAPEX). In the third quarter of this year, SK Telecom reported data center revenue of KRW 60.9 billion, a 14% increase compared to the same period last year. KT's subsidiary, kt cloud, achieved KRW 207 billion in revenue during the same period, reflecting a 6.8% growth. LG Uplus also recorded IDC revenue of KRW 90 billion in the third quarter, marking an 8.8% increase year-on-year. The competition among the three major telecom companies in AI infrastructure is expected to extend beyond merely expanding data centers, encompassing advanced technology adoption such as immersion cooling, AI semiconductor development, and platform enhancement across various domains.
3. Struggle Over AI Textbook Subscription Fees: Industry Proposes KRW 40,000 to KRW 110,000, Ministry Sets Cap at KRW 42,500
Negotiations between the Ministry of Education and textbook publishers regarding subscription fees for AI digital textbooks are ongoing, but no agreement has been reached. Publishers are requesting annual subscription fees ranging from KRW 40,000 to 110,000 per subject, while the Ministry has set a cap at KRW 42,500. As a result, the timeline for finalizing the subscription fee for AI textbooks by the end of the year has become uncertain.
On the morning of the 23rd, the Ministry of Education briefed the opposition lawmakers on the Education Committee regarding the status of AI textbooks and outlined the ongoing subscription fee negotiation process.
Following the announcement of the AI textbook evaluation results on the 29th of last month, the Ministry of Education has conducted three rounds of subscription fee negotiations. AI textbook publishers have requested annual subscription fees ranging from a minimum of KRW 40,000 to a maximum of KRW 110,000 per company. The Ministry has informed the National Assembly that it considers an average annual subscription fee of KRW 42,500 per subject as the upper limit. A Ministry official stated, "The KRW 110,000 figure presented by the publishers was the initial proposed fee, which has since been adjusted. We believe we can conclude the subscription fee negotiations by the end of the year."
Initially, the Ministry of Education requested that the 17 Metropolitan and Provincial Offices of Education estimate the AI subscription fee at KRW 37,500 per subject for the upcoming budget. However, during recent negotiations, this figure was raised to KRW 42,500. If the AI textbook subscription fee increases, additional budget allocations will likely be necessary. The budget for textbooks used in public and private schools nationwide, excluding national schools, is covered by local Ministry of Education.
The Ministry of Education is also considering the possibility of using special grants distributed by the central government to education offices to cover the additional subscription fee budget. Minister of Education Lee Ju-ho stated during the announcement of the AI textbook evaluation results on the 29th of last month, "We have established a direction to cover some of the costs with special grants if necessary, depending on the financial conditions of local education authorities."
However, if AI textbooks are classified as "educational materials" rather than "textbooks," the subscription fee negotiations will become irrelevant. The amendment to the Elementary and Secondary Education Act, which passed through the National Assembly's Law Commission on the 17th under the leadership of opposition party, includes a provision that redefines the status of AI textbooks as "educational materials" in the law, a status currently only specified in the enforcement decree as “textbooks”. While textbooks must be designated as mandatory, if AI textbooks are classified as educational materials, school principals will have the discretion to choose them.
Ⅱ. SEMICONDUCTOR INDUSTRY TRENDS
1. Rise of Custom Semiconductors in the AI Era: Expanding “Custom” Market
- Increasing demand for custom semiconductor chips from U.S. tech giants
- ASIC chip market projected to grow over 7% annually by 2031
- Samsung and SK expected to face fierce competition in HBM4 customization
The Application-Specific Integrated Circuit (ASIC) is emerging as a central focus in the era of artificial intelligence (AI). As U.S. tech giants seek optimized custom semiconductors tailored to their specific computational architectures, the demand for tailored chips is expected to grow significantly. Additionally, regarding High Bandwidth Memory (HBM), as custom HBM will be applied from the sixth generation HBM4, there are predictions that the Korean semiconductor sector must also embrace a "custom" approach.
According to market research firm Coherent Market Insights, the ASIC chip market is projected to reach approximately USD 20.29 billion (approximately KRW 29 trillion) this year, with expectations to grow to USD 32.84 billion (approximately KRW 47 trillion) by 2031. This represents a compound annual growth rate of 7.10% until 2031.
The primary workloads of data centers providing AI services are shifting from training to inference, further significantly increasing the demand for ASIC chips that can be tailored for specific tasks.
Current Status of Major Big Tech Companies' ASIC Chip Memory Equipment
Company ASIC Product Name Equipped Memory
Google TPU HBM2E
AWS Trainium2 HBM3
Microsoft Maia 100 HBM2
META MTIA LPDDR5
U.S. tech giants are simplifying their computational architectures through the use of ASIC chips, enabling them to design custom solutions. This approach allows them to reduce costs while facilitating the inference tasks they require. For instance, Google's TPU is specifically designed to be optimized for the open-source library TensorFlow. Similarly, Amazon Web Services (AWS) has tailored its custom-designed Trainium to accommodate the training of Anthropic's AI chatbot, Claude language model.
The growth of ASIC chips is seen as inevitable. ASIC chips are more efficient in terms of power consumption and cost compared to general-purpose graphics processing units (GPUs), which require extensive workloads. As a result, increased demand for custom semiconductors is expected from companies like AWS, Broadcom, and META.
HBM is set to adopt custom HBM solutions tailored to customer specifications, starting from the sixth generation HBM4. Each company requires optimization for its unique software stack and AI accelerators, which presents limitations for general-purpose HBM. As big tech firms seek customized HBM that aligns with their software, it becomes increasingly important for manufacturers like Samsung Electronics (005930) and SK Hynix (000660) to adapt to these client demands. Currently, HBM2E is equipped into Google TPU, HBM3 into AWS Trainium2, and HBM2E into Microsoft's Maia.
Starting with HBM4, the role of the base die, responsible for connecting the GPU and HBM, becomes significant. The base die serves as a critical component at the foundation of HBM, built by stacking DRAM, and undergoes a logic process to incorporate customized features based on customer demands.
An industry insider stated, "As AI investments by big tech companies continue in the coming year, the demand for custom semiconductors from AWS, Broadcom, and META is expected to increase. This will also contribute positively to the HBM business of Samsung Electronics and SK Hynix."
2. Samsung Electronics Secures System Semiconductor Design Assets, Expands Collaboration with Chinese Open-Source Platforms
- Samsung Research adopts RISC-V
- Forming partnerships against UK Arm’s monopoly
Samsung Electronics is set to collaborate with the Chinese semiconductor industry for the development of next-generation semiconductors. As the semiconductor intellectual property (IP) market in China rapidly advances, Samsung is actively pursuing partnerships in the region.
Samsung Electronics' research center in Beijing has recently initiated the recruitment of experts in RISC-V.
RISC-V is a type of intellectual property (IP) that serves as a foundation for semiconductor chip design. The semiconductor IP market is virtually dominated by the British company ARM. Samsung's mobile application processor (AP), Exynos, has also utilized ARM's licensed IP. In contrast, RISC-V is an open-source platform that can be freely accessed by anyone. Leading semiconductor companies, including Intel and Qualcomm, are also actively securing this technology.
Samsung Electronics is strengthening its research team to collaborate with the RISC-V industry in China. The company believes that it can accelerate the development of RISC-V for next-generation mobile and home appliance chips in China, which has a wealth of talent and infrastructure.
China has a much more developed RISC-V ecosystem compared to South Korea. According to the membership numbers of "RISC-V International," an organization formed by RISC-V research institutions from around the world, China ranks third with 69 members, following the European Union (EU) and the United States. In stark contrast, the UK, which ranks fourth, has only 23 members, highlighting a substantial gap, while South Korea falls outside the top 13.
An industry official stated, "While South Korea is struggling with a shortage of manpower and underperformance among companies in the semiconductor sector, China has made significant advancements and is nearing the top position globally in next-generation semiconductor fields such as RISC-V."
Samsung Electronics is actively advancing RISC-V research not only in China but also in the United States. Samsung's SAIT (Samsung Advanced Institute of Technology, formerly known as the Comprehensive Technology Institute) has established the Advanced Processor Lab (APL) in Silicon Valley, California, focusing on AI chip research utilizing RISC-V technology.
3. SK Hynix to Showcase 'AI Semiconductors' at CES, While Samsung Hosts Private Exhibition
- SK Hynix showcases latest products, including HBM
- Chairman Chey Tae-won attends, meeting with Jensen Huang draws attention
- Samsung Electronics operates private booth for clients
SK Group is set to make a significant appearance at CES 2025, the world's largest IT and electronics exhibition, scheduled to take place in early next year in Las Vegas, with a focus on artificial intelligence (AI).
Notably, SK Hynix, which is dominating the global high-bandwidth memory (HBM) market in collaboration with NVIDIA, will have its top executives, including Chairman Chey Tae-won and CEO of SK Hynix Kwak Noh-jung, in attendance to actively promote their vision.
According to industry sources on the 23rd, SK Group will operate a joint exhibition hall at CES 2025, which opens on January 7, under the theme of ‘Creating a Sustainable Future with Innovative AI Technology’.
The exhibition space, spanning approximately 1,950 metres2, will showcase SK's AI data center (DC) technology, various AI services, and collaborations with partner companies.
SK Hynix will particularly focus on showcasing its latest semiconductors optimized for AI computing, including the cutting-edge Double Data Rate 5 (DDR5) and HBM3E 16-layer products.
SK Hynix launched the world's first DDR5 products in 2020 and has successfully developed the first 10nm-class 6th generation (1c) DDR5 this year. The company will also showcase its HBM3E, a fifth-generation HBM product currently supplied to NVIDIA.
Chairman Chey Tae-won and CEO Kwak Noh-jung are to attend the event, anticipated to meet with Jensen Huang, CEO of NVIDIA, who will deliver the keynote speech at CES. This interaction could serve as another significant factor in drawing attention to SK Hynix throughout the exhibition.
During NVIDIA's Q3 earnings conference call held last month, CEO Jensen Huang expressed gratitude to the companies involved in the supply chain for the next-generation graphics processing unit (GPU), "Blackwell," stating, "We have excellent partners." Notably, he specifically mentioned SK Hynix during this acknowledgment.
In March, SK Hynix became the first to supply the fifth-generation HBM product, HBM3E 8-layer, and has recently commenced mass production of the 12-layer version, further enhancing the synergy of its collaboration with NVIDIA.
In contrast, Samsung Electronics' Device Solutions (DS) division has no plans for a separate exhibition at CES. Instead, it plans to operate a "private booth" for business partners at the event, which will not be open to the general public.
At CES 2024 earlier this year, Samsung Electronics operated a separate exhibition space for its DS division, where it installed a virtual semiconductor fab to prominently showcase key semiconductor products such as DDR5 and HBM3E.
At that time, Han Jin-man, President of Samsung's U.S. DS division (currently Head of the Foundry Division), visited the site and emphasized the company’s commitment to leading the market through bold investments in next-generation memory semiconductors.
However, Samsung Electronics has announced plans to scale back its participation in next year's CES, with only Vice Chairman Han Jong-hee, Head of the Device Experience (DX) division, in attendance. Notably, Vice Chairman Jeon Young-hyun, Head of the DS division, will not attend the event and will focus on overseeing domestic operations.
Ⅲ. BATTERY INDUSTRY TREND
1. Is K-Battery Market Share Falling to 10% Range? Drop from 31.7% to 20.2% in Three Years
- Latecomers in Prismatic and LFP raise concerns over competitiveness
- Need for rapid technology acquisition to catch up
The decline in market share of South Korea's three major battery manufacturers (LG Energy Solution, Samsung SDI, and SK On) in the global electric vehicle battery market seems to be serious.
In response to the industry's shift towards a temporary demand stagnation, known as the chasm, these companies are pursuing diversification strategies, developing prismatic and lithium iron phosphate (LFP) batteries, where Chinese firms hold a competitive advantage.
According to energy market research firm SNE Research, the combined market share of South Korea's three major battery manufacturers for electric vehicles dropped by 3.5% to 20.2% during the first ten months of this year compared to the same period last year.
This marks a significant decline in just three years from 31.7% in January to October 2021.
During the same timeframe, the combined market share of Chinese companies CATL and BYD surged from 39.7% to 53.6%, capturing a significant portion of the domestic companies' market share.
Chinese companies have secured price competitiveness leveraging strong domestic support measures, expanding their influence not only in the domestic market but also in the global arena.
Particularly in the electric vehicle market, safety concerns such as fire incidents have drawn the attention of original equipment manufacturers (OEMs) towards prismatic batteries, which are the focus of Chinese companies.
Prismatic batteries, a type of battery form factor, offer advantages such as greater resistance to external impacts and relatively better durability, as they encapsulate cells in aluminum cans.
In the global battery market, the share of prismatic batteries has been steadily increasing, rising from 70.9% last year to 78.3% during the first ten months of this year.
Amid this trend, LG Energy Solution has officially announced its development of prismatic batteries, following Samsung SDI, which was the only domestic company supplying prismatic batteries.
On the 3rd, LG Energy Solution announced its plans to develop prismatic batteries in collaboration with General Motors (GM), with the intention of integrating them into GM's next-generation electric vehicles.
Although it is a latecomer in the prismatic battery sector, the company aims to establish the capability to selectively supply based on customer demands, starting with this joint development with GM.
SK On has also completed the development of prismatic batteries and is currently in discussions with several OEMs regarding mass production timelines.
It is reported that SK On's prismatic batteries are likely to be supplied to the Chinese Zhejiang Geely Holding Group, with which it signed a "Strategic Business Cooperation Agreement" in June. Geely Group oversees approximately ten brands, including Geely Auto, Sweden's Volvo, the premium electric vehicle brand Polestar, and the high-performance vehicle manufacturer Lotus from the UK.
In addition to their focus on NCM (Nickel-Cobalt-Manganese) batteries, the three major battery manufacturers are accelerating the production of cost-competitive LFP batteries.
LFP batteries are approximately 30% cheaper than NCM batteries, making them suitable for OEMs that are shifting their attention towards more affordable electric vehicles due to the prolonged Chasm in the market.
SNE Research noted, "As the cost-competitive and thermally safe LFP began to replace NCM, China's market share has been surged significantly. In addition to Chinese OEMs, numerous global OEMs are also adopting LFP, prompting the three major manufacturers to expedite their preparations for LFP mass production."
However, the LFP market is also being actively produced by Chinese companies, which have established robust supply chains, raising doubts about the effectiveness of late entry by domestic companies.
Domestic manufacturers plan to gain their competitiveness with their technological capabilities, by developing LMFP (lithium manganese iron phosphate) batteries, which improve energy density by adding manganese to LFP, and by introducing LFP batteries with improved low-temperature performance.
2. LG Energy Solution Partners with Qualcomm to Commercialize Advanced Battery Management Solutions
LG Energy Solution has partnered with semiconductor company Qualcomm to officially commercialize a battery management system (BMS) diagnostic solution.
On the 23rd, LG Energy Solution announced that it has signed a joint promotion agreement with Qualcomm Technologies to develop a system on chip (SoC) based BMS diagnostic solution.
The diagnostic solution will be integrated into a Car to Cloud connected service platform, that utilizes ‘Snapdragon’, which is a flagship semiconductor chip of Qualcomm, and can be utilized by the automotive manufacturers.
Earlier this year, LG Energy Solution announced a collaboration plan with Qualcomm to develop next-generation BMS diagnostic solutions for electric vehicles. Subsequently, a technical consultative group was formed to conduct related research.
A representative from LG Energy Solution explained, "Through the technology sharing and validation process between the two companies, the excellence of our BMS technology and the synergy from our partner Qualcomm have been demonstrated, leading us to proceed with formal commercialization."
Unlike traditional BMS solutions that operated on low-spec hardware, this new BMS solution leverages high-performance SoC computing capabilities, making it a first in the industry.
The safety diagnostic capabilities, which is the core function of BMS solution, will be significantly enhanced. It allows quicker and more accurate diagnosis of potential anomalies such as fire risks as it collects more data compared to traditional BMS.
Additionally, the degradation diagnostic function will be refined with over 80 times the computational power, enabling the application of algorithms that were not feasible with the original BMS, which could only handle simple processing.
New features will be added, including the ability to predict the remaining battery capacity after a certain period and to monitor the degradation performance indicators of specific battery components, such as the anode and cathode.
This advanced BMS diagnostic software can be operated in real-time without the need for a separate server connection, enabling the vehicle to analyze and diagnose data, such as driving information, autonomously.
Kim Dong-myung, CEO of LG Energy Solution, stated, "It is highly significant that we have opened a pathway for the industry's first SoC-based BMS in collaboration with semiconductor leader Qualcomm, which will be crucial for the future of electric vehicles." He added, "Soon, many electric vehicle users will be able to experience differentiated customer value."
3. The Rise of ‘K-Battery’: Surpassing China and Japan
- South Korea dominates U.S. battery material import market
- With 33.7% market share
South Korea has overtaken Japan and China to secure the top position in the U.S. battery material import market.
According to the United Nations trade statistics from the Korea International Trade Association (KITA) on the 22nd, the import value of the three main secondary battery materials (cathodes, anodes, and separators) in the U.S. increased by 93% from $5.021 billion in 2020 to $9.698 billion in 2023. Cathodes, anodes, and separators are core materials for secondary batteries.
While the U.S. imports of battery materials have surged, the share of Chinese materials has significantly declined, with South Korean materials experiencing a rapid rise. In 2020, China held the top position with a 28.9% share, followed by Japan at 17.2%, Germany at 10.1%, and Canada at 9.1%. At that time, South Korea's share was only 8.5%.
However, by 2023, South Korea and Japan have recorded first and second places in market share, with respective market shares of 33.7% and 26.4%. In contrast, China's share has plummeted to 8.4%, placing it in third position.
Last year, South Korea's export value of the three major battery materials to the U.S. totaled $3.268 billion, with cathodes accounting for $2.93 billion, nearly 90%. Typically, cathodes, a key component of batteries, represents about 40% of the total battery price. This shift has emerged with the global supply chain restructuring driven by the trade war between the U.S. and China.
Analysts suggest that the increase in the volume of materials such as cathodes, anodes, and separators sourced from South Korea is reflected in trade statistics, driven by the establishment of large-scale battery plants by South Korean battery giants like LG Energy Solution, SK On, and Samsung SDI in the U.S.
For instance, LG Energy Solution is currently operating first plant in Ohio and second plant in Tennessee through its joint venture, Ultium Cells, with General Motors (GM).
In this context, the South Korean battery industry is closely monitoring recent reports indicating that the transition team of President-elect Trump is considering imposing tariffs on battery materials while significantly reducing electric vehicle consumer subsidies. Reuters, citing internal documents from the transition team, recently reported that "The Trump administration encourages domestic production, imposing tariffs on all battery materials globally, while suggesting that individual negotiations could be conducted with allied countries to exempt them from these tariffs."
The Biden administration has sought to increase the adoption of eco-friendly electric vehicles through significant financial investments in the Inflation Reduction Act (IRA), which provides subsidies for consumption and production, and to reduce reliance on China in the supply chain. In contrast, the Trump camp is expected to attract investments into the U.S. without spending any national funds by utilizing tariffs as a " stick" approach, thereby also diminishing China's industrial influence within the country.
Ⅵ. ELECTRIC VEHICLE INDUSTRY TRENDS
1. Tesla About to Overtake Hyundai as Second-best EV Brand in South Korea
Tesla is poised to surpass Hyundai (excluding Genesis) and secure the second position in the domestic electric vehicle market. Despite facing challenges such as the EV chasm and a sluggish domestic economy, Tesla has achieved a significant milestone by exceeding 20,000 new vehicle registrations for the first time since entering the South Korean market in 2017. If Tesla maintains its accumulated second position in the remaining month of the year, it will surpass Hyundai and position itself in the top two EV brands in South Korea for the first time in four years since 2020.
As of November this year, Tesla has registered a total of 28,498 new electric vehicles, narrowly surpassing Hyundai, which recorded 28,463 registrations, by just 35 units to secure the second position. Kia leads the market with 34,384 units. Following in fourth place is KG Mobility with 6,016 registrations. The German automakers occupy the fifth to eighth positions, with BMW at 5,974 units, Mercedes-Benz at 4,409 units, Audi at 3,313 units, and Volkswagen at 2,460 units. Hyundai's luxury brand, Genesis, is in ninth place with 1,405 registrations, while Porsche rounds out the top ten with 915 units.
In 2020, Tesla led the market with 11,826 registrations, surpassing Hyundai (9,604 units) and Kia (1,509 units). However, for the following three years, Tesla remained in a consistent third place. In 2021, both Hyundai and Kia launched their first dedicated electric vehicles, the Ioniq 5 and EV6, respectively, effectively targeting both domestic and international markets.
In 2021, Hyundai and Kia secured the first and second positions in the market with 24,042 and 18,087 registrations, respectively. In 2022, they continued to dominate, achieving 38,336 units for Hyundai and 34,146 units for Kia. Last year, Kia took the lead with 35,576 registrations, while Hyundai followed in second place with 28,384 units. In contrast, Tesla has struggled to break out of its range of approximately 15,000 units from 2021 to 2023.
However, this year, Tesla is aiming to reclaim the second position with new registrations approaching 30,000 units. The total number of new EV registrations rose from 31,297 units in 2020 to 123,908 units in 2022, reflecting a strong upward trend. However, this growth trend was interrupted last year, with registrations falling to 115,822 units. As of November this year, the cumulative total stands at 117,160 units. The domestic EV market is currently facing challenges due to a prolonged chasm and a sluggish economy.
Tesla's resurgence is being driven by the popularity of its SUV model, the Model Y, which has recorded 17,671 registrations, and the mid-sized sedan, the Model 3, with 10,319 units sold. This year, Tesla Korea has reduced the price of the rear-wheel drive Model Y by 2 million won in two separate instances, bringing the price down to 52.99 million won. Additionally, in April, the company launched a refreshed version of the Model 3.
2. "Three Times Higher than Korea": Hyundai and Kia Set New EV Sales Record in the U.S.
- All electric vehicle models continue growth in U.S. sales
- Ioniq 5 sales reach 39,805 units from January to November
- Achieves Sales Volume Three Times That of Domestic Market
- EV9 Sales Exceed 20,000 Units from January to November
- New Model Launches Benefit from U.S.-Tailored Strategy
Hyundai and Kia continue to set new records in electric vehicle sales in the United States. All EV models sold in the U.S. are experiencing sustained growth.
Notably some models have seen U.S. sales figures reaching three to ten times those in the domestic market, indicating strong popularity. Analysts suggest that consistent new model launches and a tailored strategy for the U.S. market are contributing to the increase in EV sales in the U.S.
According to industry sources, all EV models sold by Hyundai and Kia in the U.S. have shown an increase in sales compared to last year.
The sales of Hyundai's compact electric SUV, the Ioniq 5, reached 39,805 units from January to November, marking a 30% increase from the same period last year (30,657 units sold).
The Ioniq 5 achieved sales of 4,989 units in November alone, significantly boosting its sales momentum. This represents a remarkable 110% increase compared to the sales figure of 2,372 units in November of last year.
Notably, the U.S. sales of the Ioniq 5 from January to November are approaching three times the domestic sales during the same period. Domestic sales of the Ioniq 5 recorded 13,602 units.
Hyundai's mid-size electric sedan, the Ioniq 6, recorded U.S. sales of 11,055 units from January to November, reflecting a slight 1% increase compared to the same period last year, when sales were 10,943 units.
Kia's compact electric SUV, the EV6, recorded U.S. sales of 19,604 units from January to November, representing an 11% increase compared to the same period last year (17,630 units).
In the case of Kia's large electric SUV, the EV9, it achieved sales of 20,066 units in the U.S. from January to November, marking the highest sales among Kia's electric vehicles. Analysts suggest that the EV9, which officially launched in the U.S. market this year, has seen significant success.
In fact, the U.S. sales of the EV9 from January to November exceed ten times the domestic sales during the same period, which totaled 1,903 units.
Analysts attribute the continued growth in EV sales for Hyundai and Kia in the U.S. to a consistent launch of new models and a successful tailored strategies for the U.S. market.
Hyundai introduced the 2025 model of the Ioniq 5, a refreshed version, to the U.S. market last September.
Kia unveiled the high-performance EV9 GT model along with a refreshed version of the EV6 at the 2024 LA Auto Show held at the Los Angeles Convention Center last month. The refreshed EV6 is set to launch in the U.S. market next spring, while the EV9 GT is expected to be released in the second half of next year.
Additionally, the tailored strategies for U.S. consumers are proving effective.
A notable example is the application of Tesla's charging port on the refreshed models of the Ioniq 5 and EV6. This allows users to access over 17,000 Tesla Supercharger stations in the U.S. without the need for a separate adapter. The company enhanced consumer convenience by incorporating a competitor's charging port into its flagship EV models.
An industry insider stated, "Hyundai and Kia are continuously strengthening their leadership in the U.S. EV market through new model launches and localized strategies. Despite a slowdown in EV demand, they continue to experience sales growth."
3. Next Year's EV Subsidy to Be Finalized Early Next Month. Decreased by 1 Million Won Compared to This Year
- Ministry of Environment holds briefing on EV reform plan on the 23rd
The electric vehicle subsidy for next year is expected to be finalized early next month.
According to government sources on the 22nd, the Ministry of Environment plans to hold a briefing on the 23rd for industry stakeholders on next year's electric vehicles subsidy reform plan. If there are no significant objections during the briefing, the subsidy for next year is anticipated to be confirmed as early as the end of this month or the beginning of next month.
The Ministry of Environment has been releasing revisions to the EV subsidy plan annually. However, following concerns that the confirmation of the subsidy plan in February for both last year and this year has led to a significant decline in EV sales in January, this is interpreted as an intention to expedite the timeline for the announcement.
However, the amount of subsidy that consumers can receive for EVs will be slightly reduced. This year, subsidies were available for EVs priced below 55 million won, but next year the threshold will be tightened to below 53 million won.
The government subsidy for electric passenger vehicles has been set at 3 million won, which is 1 million won less than this year's rate of 4 million won. Additionally, the subsidy for electric trucks has been reduced to an average of 10 million won per vehicle, down by 1 million won compared to this year.
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