Electric vehicle (EV) sales have slowed down worldwide since 2023, and this trend has continued throughout 2024, fueling concerns that EV demand has plateaued. Yet, this slowdown seems limited specifically to battery electric vehicles (BEVs), as sales of plug-in hybrid electric vehicles (PHEVs) and hybrid electric vehicles (HEVs) are surging. This suggests that the overall march toward electrification is proceeding, but may be taking a more circuitous route. In South Korea, HEV sales have been growing rapidly as PHEV sales remain flat and BEV sales crash. This leaves the Korean EV market far more vulnerable to a reverse pivot to internal combustion engine (ICE) vehicles than its global counterparts. The global slowdown in BEV sales has also suppressed sales of Korean-made batteries, but this is mitigated by continued strength in HEV and PHEV sales.

The global drive toward carbon neutrality has fueled optimistic expectations regarding the sales of BEVs and PHEVs, and many experts have projected that EVs would account for nearly 40 percent to 50 percent of total global car sales by 2030. These projections now seem somewhat off the mark, however, and need to be revisited in light of the current downturn in the EV market, particularly as BEV sales have stalled. China plays a central role in the global battery and EV markets and presents a major threat to other countries producing these goods. The demand for Chinese EVs is strong not just within China but also around the world, with Chinese EV makers claiming an ever-rising share of the global market. Chinese EVs account for over 10 percent of all EVs sold across Europe, and dominate the EV markets of latecomer countries and developing nations. Chinese-made EVs accounted for nearly 30 percent of all EVs sold in South Korea in the first half of 2024. The same is true in the global battery industry; Chinese batteries enjoy worldwide popularity alongside Chinese EVs, owing to their affordability. Lithium iron phosphate (LFP) batteries made in China are both technologically competitive and cost-effective, offering an extremely strong value proposition. They are poised to dominate the world market.

In the long run and on the global level, BEV sales should continue to grow, albeit at a more modest rate. The Korean government and businesses therefore need to do their part to ensure that Korean EVs remain competitive on the global market. New plans are needed to support the production of Korean PHEVs as well, as these EVs are enjoying a surge in popularity worldwide. In order for Korean automakers and battery makers to compete with their Chinese competitors — both in Korea and around the world — Korean automakers need to innovate their production systems and value chains to achieve a level of efficiency on a par with their Chinese competitors. Korean producers, moreover, need to differentiate their products from their Chinese competition by providing superior autonomous driving technologies, smart features, and attractive designs. Battery makers need to adjust their plans for investing in further facilities as global battery demand is unlikely to grow at the optimistic rates projected hitherto.

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