Auto Industry Warns Government’s NDC Transportation Sector Target Unrealistic

The domestic automobile industry has expressed concerns about the government’s national greenhouse gas reduction target (NDC), which would require nearly all vehicles to be sold as zero-emission vehicles by 2035, stating that it lacks feasibility.

The Korea Automobile & Mobility Industry Association (KAIA) announced that it held an emergency meeting on Sept. 26 to consolidate the automotive industry’s position on the transportation sector reduction targets and zero-emission vehicle supply goals presented by the government at the NDC transportation sector public discussion. KAIA is a federation of 11 domestic automobile associations, including the Korea Automobile & Mobility Industry Association (KAMA) and the Korea Auto Industries Coop. Association (KAICA).

KAIA pointed out that to achieve the target announced by the government, almost all vehicles would need to be sold as zero-emission vehicles by 2035. In the NDC reduction scenario, the government set the target for zero-emission vehicle registration ratio and supply volume at up to 9.8 million (35%) out of the total 28 million registered vehicles by 2035. KAIA explained that this target can only be achieved if all vehicles sold in 2035 are zero-emission vehicles, considering a realistic supply path.

KAIA emphasized the need for setting sustainable and realistic targets that consider the transition response capabilities of the domestic industrial ecosystem. Excessive supply targets could lead to regulations such as average carbon dioxide regulations for automobiles and sales mandates, potentially increasing the regulatory burden on the industry.

In particular, they expressed concern that this could lead to market encroachment by Chinese electric vehicles in the domestic market. The share of imported cars in the passenger electric vehicle market increased from 16% in 2015 to 40.4% in 2024. The share of Chinese vehicles surged from 0% to 25.9% during the same period. For electric buses, the share of imported vehicles increased from 0% to 36.2%, all of which were found to be Chinese.

During the meeting, it was mentioned that the government’s plan could also threaten the survival of the parts industry. 95.6% of parts companies are small and medium-sized enterprises, and in 2024, sales decreased by 4.1%, while OEM (original equipment manufacturer) supply decreased by 5.6%. Only 15-18% of all parts companies produce eco-friendly vehicle parts, indicating that the industrial ecosystem is not sufficiently formed. Participants stated, “It is difficult for individual companies to handle the transition to future vehicles on their own,” and added, “Specific and innovative transition support measures that consider the electrification transition capabilities of the domestic parts industry should be prepared in advance.”

Currently, major countries such as the United States and Europe are also adjusting their electrification pace to protect their domestic industries. The United States has abolished zero-emission vehicle sales mandate regulations, and the German Automobile Association has declared that a 100% transition to electrification by 2035 is impossible.