Agreement signed to enter the ASEAN eco-friendly electric vehicle market… Entry within the year is expected.
Promoting commercialization with domestic small and medium-sized eco-friendly vehicle parts companies.

Eco-friendly car parts companies are joining forces to expand into the ASEAN market by popularizing eco-friendly, multi-purpose electric vehicles.

The Vietnam-Korea Electric Vehicle SME Consortium (Permanent Representative Kim Jong-bae) and the Vietnam-Korea Business and Investment Association (Chairman Tran Hai Linh, hereinafter referred to as VKBIA) signed an agreement on the 28th to advance into the ASEAN market.

▲ Kim Jong-bae, standing representative of the Vietnam-Korea Electric Vehicle SME Consortium (left), and Tran Hai Linh, chairman of the Vietnam-Korea Business and Investment Association (right).

In this agreement, VKBIA will connect local Vietnamese companies with Korean parts companies and support related commercialization, while the Korea Electric Vehicle SMEs Association (VKEVC) will jointly promote the development of eco-friendly vehicles optimized for the ASEAN market.

In addition, the Gwangju Green Car Promotion Agency, Honam University, and VKBIA will collaborate on industry-academia-research cooperation to foster eco-friendly vehicle experts. An agreement has also been signed. The Green Car Promotion Agency is supporting eco-friendly parts manufacturers entering the Vietnamese market and expects this agreement to aid local marketing efforts scheduled for June. Honam University, the only automotive engineering department in Gwangju and South Jeolla Province, will actively support Vietnamese students in acquiring specialized automotive-related skills, leveraging its years of experience in international exchange.

Manufacturing parts in Vietnam is seen as a strategy that can provide a significant competitive edge in terms of price.

Vietnam's VinFast has announced plans to discontinue all internal combustion engine models and focus solely on electric vehicles, aiming to sell over one million vehicles by 2028. However, VinFast is unable to source components domestically and instead imports all its components from Germany, leaving it unable to find a way to lower prices in the domestic market and operating at a loss.

It is believed that producing components, including batteries, locally will not only be price competitive but will also be advantageous in Vietnam, where the trend of moving away from China in the supply chain is spreading.

This forum will focus on the importance of the ASEAN market, which boasts a population of approximately 670 million and an average annual economic growth rate of 5%, and the need to expand the use of eco-friendly transportation in this region, where transportation accounts for 40% of greenhouse gas emissions.

To ensure environmental friendliness, VKEVC plans to utilize a unified battery pack based on solar renewable energy. By using shared batteries, the sales price of electric vehicles can be lowered, and this could also lead to expansion into the service platform business.

Additionally, VKEVC claims that all energy supply will be provided by renewable energy sources based on Vietnam's abundant solar energy, which will greatly contribute to efficiency and economy.

Despite numerous adverse factors such as the COVID-19 pandemic, the Russia-Ukraine war, and the global recession, the ASEAN market is rapidly emerging as Korea's most important export trading partner. Last year, Korea's exports increased by 14.8% year-on-year to approximately $124.9 billion, and imports increased by 21.9% year-on-year to approximately $82.5 billion. With a total trade volume of approximately $207.5 billion and a trade balance of approximately $42.4 billion, the market is rapidly becoming Korea's most important export trading partner.

Kim Jong-bae, the standing representative of the Korean consortium, expressed his expectations for the growth potential of Korean companies in the ASEAN market, saying, “The transition to low-carbon transportation in developing countries in Asia can not only help achieve national greenhouse gas reduction targets (NDCs) through CO2 reductions, but also protect health through improved air quality, strengthen energy security, and provide opportunities for economic growth, such as the production of products related to electric vehicles.”