Public and private sectors support 14 trillion won to the auto parts industry… “Achieving $80 billion in exports this year”

President Yoon Suk Yeol attends a groundbreaking ceremony for Korea's first customized electric vehicle plant at Kia AutoLand in Hwaseong-si, Gyeonggi-do Province, on April 11, 2023.     April 11, 2023     Kia AutoLand, Hwaseong-si, Gyeonggi-do Province     KOCIS(Korean Culture and Information Service)  Official Photographer : JEON HAN Policy

Announcement of ‘Future Car Conversion and Export Support Measures’… Joint support from the government, automakers, and supporting organizations

The government, automakers, and related organizations actively nurture the automotive parts industry, such as software (SW) and electric vehicles, which will play a key role in the future mobility era, and provide full support so that they can respond in a timely manner to the transition from internal combustion vehicles to future vehicles. go out

The Ministry of Trade, Industry and Energy held the ‘Automotive Parts Industry Strategy Roundtable’ on the 23rd and announced ‘Future Car Conversion and Export Support Measures’ as President Yoon Seok-yeol ordered the preparation of measures to strengthen the competitiveness of the automobile parts industry in March and April. .

Accordingly, the automobile industry (finished car parts) is pushing to achieve a record-high export of $80 billion this year. In particular, the government and the private sector will supply more than KRW 14.3 trillion in funds to secure liquidity and support investment for the future in the parts industry. .

In addition, with electric vehicle tax credits and private investment of 95 trillion won, the scale of electric vehicle production will be increased 5 times, and core technologies will be secured to strengthen the constitution of future vehicles, as well as professional manpower will be trained.

President Yoon Seok-yeol gives a congratulatory speech at the groundbreaking ceremony for an electric car factory held at Kia Autoland Hwaseong in Hwaseong-si, Gyeonggi-do on April 11. April 11, 2023.  Source: Office of the President flickr.  Official Photographer : Kim Yong Wii

The support measures for the parts industry announced by the Ministry of Trade, Industry and Energy on the day are ▲ 14.3 trillion won in funding and securing work ▲ securing core technologies, fostering experts, and enacting a special law on future vehicle parts ▲ expanding exports of automobile parts to three promising markets. It is composed of core tasks.

Through this, it is expected that this year’s exports of the automobile industry will exceed $80 billion, a record high, while leading to innovation in other high-tech industries such as system semiconductors, large displays, carbon composites, biohealth, and software.

◆ Supply of funds and work to the parts industry

First of all, the government will inject 5.4 trillion won into the internal combustion engine parts industry and 3.5 trillion won into future vehicles such as self-driving through policy financial institutions such as Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund.

In addition, commercial banks plan to operate a low-interest loan product worth about 250 billion won this year that lowers the loan interest rate by up to 2%p for parts companies that procure investment funds in the future car sector.

Meanwhile, the Hyundai Motor Group announced concrete win-win plans, such as supply chain stabilization funds, loan guarantees for tier 2 and 3 suppliers with difficulties in credit loans, and creation of joint investment R&D funds to secure future competitiveness.

In addition, it plans to continue reviewing additional support measures, such as expanding overseas sales channels for partners and strengthening R&D support related to electrification.

A virtuous cycle structure of demand and supply will be established by boosting domestic demand for future vehicles such as electric vehicles and inducing expansion of production capacity, and through this, the parts industry will promote the supply of new jobs in the field of future vehicles.

Accordingly, with the goal of domestic supply of 2 million eco-friendly future vehicles by the first half of 2027, individual consumption tax for electric vehicles and acquisition tax reduction for hybrid vehicles have been extended for two years until the end of 2024, and hydrogen truck acquisition tax reductions will be newly established in line with the expansion of supply of hydrogen vehicles in the future.

Through the purchase subsidy of 1.9 trillion won for electric vehicles this year, the amount of subsidies for electric vehicles will be increased by 29% compared to last year, and 270,000 new electric vehicles will be supplied this year.

Starting this year, the mandatory purchase of electric and hydrogen vehicles in the public sector will be raised from 80% to 100%, and electric vehicle chargers, an essential infrastructure for the supply of electric vehicles, will also be significantly expanded from 190,000 units in 2022 to more than 1.23 million units in 2030.

◆ Support for strengthening the fundamentals of the parts industry

We support the securing of core technologies for future cars in our parts industry and nurture experts such as software needed by the industry.

Promote the localization of six core parts for future vehicles, including automotive semiconductors, battery systems, SW, sensors, fuel cells, and communications, and develop 12 types of convergence materials, including rare earth motors and lightweight battery pack materials, to improve fuel efficiency and stabilize the supply chain. support

In particular, it plans to invest 2 trillion won in R&D funds by 2027 in the field of self-driving and eco-friendly vehicles.

In addition, as with Tesla’s ‘Giga Press’ technology, with the goal of reducing production costs by more than 30%, ‘Giant Press’ technology development, a project to localize ultra-large mold equipment, will be promoted together with the private sector.

In a transitional period, so that the internal combustion engine vehicle can serve as a source of funds for the parts industry to respond to future vehicles, it will also support the performance enhancement of internal combustion engine parts, such as upgrading hybrid systems for SUVs and developing hydrogen engines.

In addition, by 2030, it plans to nurture and supply 30,000 core manpower for future cars, which accounts for about 86% of the estimated 35,000 manpower required in the future car sector.

In order to systematically support the transformation of the automobile ecosystem into future cars, the government is also promoting the enactment of the ‘Special Act on the Promotion of Transformation of the Future Automotive Parts Industry and Fostering of the Ecosystem’ with the goal of the first half of this year.

Through this, the scope of future car technology is expanded to include not only existing hardware but also software, etc., and the legal basis for granting special cases for easing support requirements for various government support projects, such as designation of future vehicle specialized parts complexes and government R&D projects and FDI/GIT subsidies. arrange

Meanwhile, by establishing a business reorganization support governance in which the private sector and the government collaborate, the company will provide one-stop support for business reorganization from discovering future car conversion demand companies to consulting, research and development (R&D), finance, and sales channels.

◆ Expansion of parts export and promotion of global supply chain entry

By actively supporting the overseas market development and export expansion of the auto parts industry, this year, we will promote exports of more than 80 billion dollars, the highest ever, including 57 billion dollars for automobiles and 24 billion dollars for automobile parts.

Accordingly, for the US and EU, the reorganization of the supply chain according to the promotion of strengthening domestic and regional supply chains, such as the Inflation Reduction Act and the Core Raw Materials Act, is used as an opportunity to support exports and new supply chain entry of domestic auto parts companies.

It is also accelerating its entry into the three promising markets of the Middle East, China/Japan, and ASEAN/India. First, it promotes global OEMs’ participation in the supply chain by supporting domestic parts companies to participate in auto parts exhibitions held in Nagoya, Japan.

In the case of ASEAN countries such as Indonesia and the Philippines, it plans to support the development of vehicles and parts tailored to local demand, such as micro electric vehicles, and expand ASEAN ODA projects to establish a bridgehead for Korean companies to enter.

Industry Minister Lee Chang-yang predicted, “This year’s automobile and parts exports will be able to reach 80 billion dollars for the first time in history, with automobile exports reaching a record high by April this year.”

At the same time, he emphasized, “The public and private sectors must work together to continue this brisk export trend, while preparing for the future mobility era.”

In addition, he said, “With the paradigm shift in the automobile industry, such as electrification and intelligence, great changes are expected in our automobile ecosystem.” It has meaning,” he added.

Meanwhile, prior to the roundtable meeting, five domestic automakers, including Hyundai Motor Company, Kia Motors, GM Korea, Renault Korea Motors, and KG Mobility, signed a ‘Win-Win Declaration of Automakers and a Joint Business Agreement with 8 Related Organizations’ to support parts companies.

At the business agreement ceremony on the day, finished vehicle manufacturers jointly declared that they would strengthen win-win cooperation with the parts industry, such as support for securing liquidity for parts suppliers and joint technology development.

Inquiries: Ministry of Trade, Industry and Energy Automobile Division (044-203-4329)

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