Episode 11- Plugged in_Redefining Mobility_ The Powertrain Perspective of South Korea
Welcome to the 11th episode of the Asia Pacific Auto Podcast by S&P Global Mobility.
I'm your host, Gaurav Vangaal, and joining me today is Ryan Sangmin Lee from Seoul.
Ryan is our expert on the South Korean light vehicle powertrain sector, a country that ranks as the sixth largest light vehicle producer with 4.
Ryan regularly engages with our clients and offers valuable strategic insights on the regional trends.
Today, he will help us explore the current trends in the South Korea's powertrain sector and share his insights on the transformation towards electric vehicles in the coming years.
Welcome, Ryan.
Thank you so much for, uh, for having me on the AutoPodcast.
And it's really an honor to be here.
So I'm also very excited to chat with you today.
So, uh, let's, let's start, let's begin, uh, then Ryan, uh, let's begin with the Powertrain Outlook for Korea.
uh, how do you perceive the competition among electric vehicles, hybrid vehicles and plug in hybrids?
So, and what do you think about the penetration level by 2000?
Oh, that's very interesting.
And that's very big question.
Um, South Korea's car industry is undergoing a really interesting shift as we look toward 2030 and 2035.
Um, we're seeing a big push for electrification, but what's unique here is a strong focus on hybrid technologies.
By 2031, we're expecting about 36 percent of production to be BEVs and 37 percent to be full hybrids, and a smaller share around 3 to 4 percent for plug in hybrids.
The rest, about 23%, will be the internal combustion engine vehicles.
Now, compared to other regions, South Korea's BEV production might look a bit less aggressive, but the real story is how much emphasis we're placing on hybrids.
I think it's a smart approach, especially for both domestic and export markets like the U.
S.
In some ways, it's similar to Japan's hybrid strategy, though we're taking a slightly more moderate stance.
This focus really shows South Korea's effort to balance electrification with real world challenges, uh, things like CO2 reduction and what consumers actually need right now?
Oh, that's that's a wonderful and that's an amazing uh trend I am noticing first time in the region where where a south korean Transformation is expected in competition with the e waste and more towards the full hybrids.
I think 37 full hybrids It's it's a great number by 2035.
Let me go towards the next question related to this Is there a specific reason for south korean?
South Korea's vehicle production strategy has always been pretty export driven.
And that's no surprise considering how important exports are to the country's economy.
Take the U S for example, it's South Korea's largest export market.
So naturally it has a huge influence on production decisions.
If the U.
S.
pushes hard for BEVs, South Korean manufacturers will lean more into producing electric vehicles.
On the other hand, if the U.
S.
takes a more relaxed regulatory stance, we'll likely see a stronger focus on hybrids and even ICEs.
So, uh, in recent years, U.
S.
policies have been a bit less strict compared to regions like Europe and mainland China, where the regulations are driving a much faster shift toward BEVs.
Because of that, South Korea has chosen to take a more balanced approach overall.
Okay.
So, uh, now, now we, we can, uh, move towards the, uh, car makers and we understand that Hindu, which is the, one of the largest car producer.
Um, what strategy do you think Hyundai should adopt?
Will it focus on electric vehicles or hybrid vehicles?
As we understand the intense competition coming from the Chinese car makers in the Asian region.
How do you foresee Hyundai responding to this competition?
One thing that I want to mention before going into the the answer is that Hyundai accounts for over 80 percent of vehicle production in South Korea every year.
So in a lot of ways you can say Hyundai's strategy is very similar to what I've what I have mentioned for South Korea's XCV strategy.
So when I think of Hyundai, the word that really comes to mind is flexibility.
They've always been great at adapting to different markets by not locking themselves into just one or two powertrain technologies.
Instead, they've taken a flexible approach, tailoring their strategy to fit the needs of each region.
So just look at their portfolio.
They are offering everything from 48 volt mild hybrid systems to fuel cell electric vehicles and even 800 volt BEVs.
That kind of versatility explains what they want to do.
I also, um, don't think Hyundai is increasing its BEV offerings purely in response to competition from Chinese automakers in Asia.
That competition might be speeding things up a bit, but Hyundai seems to be more interested in positioning themselves as a global leader in the BEV space.
They don't seem to be just reacting to competition.
But they seem to become much more proactive in recent years in BEV, aligning with where the industry is headed.
And adapting to global trends and regulations.
This is, uh, this is, this is good to know, um, uh, about Hyundai.
So, uh, next we move towards the, uh, battery sizes, motor sizes, and driving ranges.
I think one of the, uh, major, um, uh, anxiety reason for the consumers.
uh, so what, what do you are expecting?
What are the most, uh, uh, problems?
Popular battery sizes, uh, motor sizes and driving ranges, uh, which car makers are, uh, uh, looking to develop, uh, in the South Korean right now, be the specification in South Korea are pretty much in line with global trends.
So the most common battery sizes are in the 60 to 80 kilowatt hour range, typically paired with a single motor that puts out about 160 kilowatts.
That setup gives you a driving range of, of over 400 kilometers, which has really become the baseline that consumers expect these days.
But as we look ahead to 2030 or even 2035, I'm not so sure we're going to see automakers endlessly pushing for bigger and bigger batteries or more powerful motors.
At the end of the day, OEMs are under a lot of pressure to cut costs.
So I think they will start taking a more creative approach from there.
Instead of just focusing on making motors more powerful, we'll probably see a shift toward finding smarter, more efficient combinations of propulsion systems.
As you may know, it's not just about raw performance anymore.
It's about delivering the best balance of efficiency, cost and practicality for consumers.
Yeah, that's that's that's correct.
Actually, the practicality is the one of the most important factor for the consumer.
We usually ask this question that what So what is the most important discussion happening in the market?
And I think recently some of the fire, uh, broke out in the apartments was one of the major concerns in the South Korea.
Is there any specific South Korea, uh, obstacle, what you're looking for?
The EV market, just like what you mentioned.
Um, one of the big challenges for the EV market in South Korea right now is the concern over EV related fires.
There have been a few high profile incidents recently, particularly in underground parking lots of apartment complexes.
These fires didn't just damage the parking facilities, but they also spread to parts of the residential areas, which is a huge deal because in South Korea, apartments are often the most valuable assets people own.
The financial impact has been significant with, uh, you know, property values taking a hit, and that's created a lot of anxiety among homeowners.
Because of this, there is now a bit of social pressure when it comes to buying an EV.
Some people are even hesitant to park near EVs in shared spaces like underground lots.
So overcoming this issue is going to take time, probably, uh, You know, a few years at least, I think the key here will be introducing EVs with truly safe and reliable battery technologies that can help consumers feel confident and secure about their safety.
If people can trust that EVs are just as safe, if not safer than conventional vehicles.
That's going to be the safest, uh, fastest way to get the, get past this hurdle and help the EV market grow again in South Korea.
Thank you for your time.
uh, Ryan, uh, the insights and expertise you have provided have been incredibly valuable and I can assure you this is one of the best, um, uh, podcast I have recorded till now.
Um, your, your insights were actually amazing.
uh, so I thank you very much for joining us.
Thank you Gaurav.
Thank you very much everyone listening.
Let's meet again in our next episode of the Asia Pacific Auto Podcast by S&P Global Mobility.
Welcome to the 11th episode of the Asia Pacific Auto Podcast by S&P Global Mobility.
I'm your host, Gaurav Vangaal, and joining me today is Ryan Sangmin Lee from Seoul.
Ryan is our expert on the South Korean light vehicle powertrain sector, a country that ranks as the sixth largest light vehicle producer with 4.
Ryan regularly engages with our clients and offers valuable strategic insights on the regional trends.
Today, he will help us explore the current trends in the South Korea's powertrain sector and share his insights on the transformation towards electric vehicles in the coming years.
Welcome, Ryan.
Thank you so much for, uh, for having me on the AutoPodcast.
And it's really an honor to be here.
So I'm also very excited to chat with you today.
So, uh, let's, let's start, let's begin, uh, then Ryan, uh, let's begin with the Powertrain Outlook for Korea.
uh, how do you perceive the competition among electric vehicles, hybrid vehicles and plug in hybrids?
So, and what do you think about the penetration level by 2000?
Oh, that's very interesting.
And that's very big question.
Um, South Korea's car industry is undergoing a really interesting shift as we look toward 2030 and 2035.
Um, we're seeing a big push for electrification, but what's unique here is a strong focus on hybrid technologies.
By 2031, we're expecting about 36 percent of production to be BEVs and 37 percent to be full hybrids, and a smaller share around 3 to 4 percent for plug in hybrids.
The rest, about 23%, will be the internal combustion engine vehicles.
Now, compared to other regions, South Korea's BEV production might look a bit less aggressive, but the real story is how much emphasis we're placing on hybrids.
I think it's a smart approach, especially for both domestic and export markets like the U.
S.
In some ways, it's similar to Japan's hybrid strategy, though we're taking a slightly more moderate stance.
This focus really shows South Korea's effort to balance electrification with real world challenges, uh, things like CO2 reduction and what consumers actually need right now?
Oh, that's that's a wonderful and that's an amazing uh trend I am noticing first time in the region where where a south korean Transformation is expected in competition with the e waste and more towards the full hybrids.
I think 37 full hybrids It's it's a great number by 2035.
Let me go towards the next question related to this Is there a specific reason for south korean?
South Korea's vehicle production strategy has always been pretty export driven.
And that's no surprise considering how important exports are to the country's economy.
Take the U S for example, it's South Korea's largest export market.
So naturally it has a huge influence on production decisions.
If the U.
S.
pushes hard for BEVs, South Korean manufacturers will lean more into producing electric vehicles.
On the other hand, if the U.
S.
takes a more relaxed regulatory stance, we'll likely see a stronger focus on hybrids and even ICEs.
So, uh, in recent years, U.
S.
policies have been a bit less strict compared to regions like Europe and mainland China, where the regulations are driving a much faster shift toward BEVs.
Because of that, South Korea has chosen to take a more balanced approach overall.
Okay.
So, uh, now, now we, we can, uh, move towards the, uh, car makers and we understand that Hindu, which is the, one of the largest car producer.
Um, what strategy do you think Hyundai should adopt?
Will it focus on electric vehicles or hybrid vehicles?
As we understand the intense competition coming from the Chinese car makers in the Asian region.
How do you foresee Hyundai responding to this competition?
One thing that I want to mention before going into the the answer is that Hyundai accounts for over 80 percent of vehicle production in South Korea every year.
So in a lot of ways you can say Hyundai's strategy is very similar to what I've what I have mentioned for South Korea's XCV strategy.
So when I think of Hyundai, the word that really comes to mind is flexibility.
They've always been great at adapting to different markets by not locking themselves into just one or two powertrain technologies.
Instead, they've taken a flexible approach, tailoring their strategy to fit the needs of each region.
So just look at their portfolio.
They are offering everything from 48 volt mild hybrid systems to fuel cell electric vehicles and even 800 volt BEVs.
That kind of versatility explains what they want to do.
I also, um, don't think Hyundai is increasing its BEV offerings purely in response to competition from Chinese automakers in Asia.
That competition might be speeding things up a bit, but Hyundai seems to be more interested in positioning themselves as a global leader in the BEV space.
They don't seem to be just reacting to competition.
But they seem to become much more proactive in recent years in BEV, aligning with where the industry is headed.
And adapting to global trends and regulations.
This is, uh, this is, this is good to know, um, uh, about Hyundai.
So, uh, next we move towards the, uh, battery sizes, motor sizes, and driving ranges.
I think one of the, uh, major, um, uh, anxiety reason for the consumers.
uh, so what, what do you are expecting?
What are the most, uh, uh, problems?
Popular battery sizes, uh, motor sizes and driving ranges, uh, which car makers are, uh, uh, looking to develop, uh, in the South Korean right now, be the specification in South Korea are pretty much in line with global trends.
So the most common battery sizes are in the 60 to 80 kilowatt hour range, typically paired with a single motor that puts out about 160 kilowatts.
That setup gives you a driving range of, of over 400 kilometers, which has really become the baseline that consumers expect these days.
But as we look ahead to 2030 or even 2035, I'm not so sure we're going to see automakers endlessly pushing for bigger and bigger batteries or more powerful motors.
At the end of the day, OEMs are under a lot of pressure to cut costs.
So I think they will start taking a more creative approach from there.
Instead of just focusing on making motors more powerful, we'll probably see a shift toward finding smarter, more efficient combinations of propulsion systems.
As you may know, it's not just about raw performance anymore.
It's about delivering the best balance of efficiency, cost and practicality for consumers.
Yeah, that's that's that's correct.
Actually, the practicality is the one of the most important factor for the consumer.
We usually ask this question that what So what is the most important discussion happening in the market?
And I think recently some of the fire, uh, broke out in the apartments was one of the major concerns in the South Korea.
Is there any specific South Korea, uh, obstacle, what you're looking for?
The EV market, just like what you mentioned.
Um, one of the big challenges for the EV market in South Korea right now is the concern over EV related fires.
There have been a few high profile incidents recently, particularly in underground parking lots of apartment complexes.
These fires didn't just damage the parking facilities, but they also spread to parts of the residential areas, which is a huge deal because in South Korea, apartments are often the most valuable assets people own.
The financial impact has been significant with, uh, you know, property values taking a hit, and that's created a lot of anxiety among homeowners.
Because of this, there is now a bit of social pressure when it comes to buying an EV.
Some people are even hesitant to park near EVs in shared spaces like underground lots.
So overcoming this issue is going to take time, probably, uh, You know, a few years at least, I think the key here will be introducing EVs with truly safe and reliable battery technologies that can help consumers feel confident and secure about their safety.
If people can trust that EVs are just as safe, if not safer than conventional vehicles.
That's going to be the safest, uh, fastest way to get the, get past this hurdle and help the EV market grow again in South Korea.
Thank you for your time.
uh, Ryan, uh, the insights and expertise you have provided have been incredibly valuable and I can assure you this is one of the best, um, uh, podcast I have recorded till now.
Um, your, your insights were actually amazing.
uh, so I thank you very much for joining us.
Thank you Gaurav.
Thank you very much everyone listening.
Let's meet again in our next episode of the Asia Pacific Auto Podcast by S&P Global Mobility.
