Korea’s mobility industry traces its roots to the emergence of automobile manufacturing in the 1960s and 70s. The country entered the sector through simple assembly production, then gradually built its capabilities as a finished-vehicle manufacturer—most notably with the successful development of the Pony, Korea’s first independently designed car, in the 1970s.

Building on that foundation, Korea developed closely integrated supply chains and large-scale mass production systems that lifted both price competitiveness and quality, enabling a full push into global automotive markets. This fast-follower strategy, rooted in manufacturing strength, cemented Korea’s standing in the industry.

Entering the 2010s, Korea pivoted toward electric vehicles in response to tightening environmental regulations and a shifting energy paradigm, moving quickly to stake out a position in the future mobility market. Bold, preemptive investments and technological innovations paid off: Korea secured a leading position in battery technology and automotive electronics. This laid the groundwork for Korea to evolve beyond finished-vehicle manufacturing into a global supply chain hub for the core components of next-generation vehicles.

Backed by sweeping government investment and public-private collaboration, Korea’s mobility industry crossed the KRW 300 trillion revenue threshold last year, cementing its role as a pillar of the national economy. Hyundai and Kia are targeting annual sales of 7.5 million vehicles this year, steadily expanding their grip on global markets through a portfolio weighted toward high-margin eco-friendly and premium models.

Underlying these achievements is a distinctly Korean model. A proactive government vision and substantial infrastructure investment—most visibly the nationwide rollout of ultra-high-speed communications networks—have provided the foundation for mobility innovation.

Korea became the world’s first country to commercialize 5G in 2019, and by 2025 its 5G coverage rate in major public venues (such as shopping malls, airports and subway stations) had exceeded 98%. That nationwide network is expected to serve as critical infrastructure for V2X (vehicle-to-everything) communication—the backbone of autonomous driving—accelerating the pace of mobility innovation.

Korean consumers’ high receptivity to new technology has also been a significant asset. A culture that embraces and internalizes emerging technologies quickly, combined with an efficiency-oriented mindset, has made Korea an ideal global testing ground for mobility innovations. In December 2019, Korea established the world’s first safety standards for Level 3 autonomous vehicles, which allow conditional hands-free driving. This pioneering move directly contributed to the formation of global norms. Korea was also the first in the world to deploy a 5G-based V2X service. Operating via a next-generation Cooperative Intelligent Transport Systems (C-ITS) across major roads nationwide, this service transmits pedestrian proximity and accident risk data to vehicles within 0.1 seconds.

This mature demonstration infrastructure has drawn in major global players: autonomous driving firm Pony.ai, chip company NVIDIA and LiDAR (Light Detection and Ranging) companies have all chosen Korea as a testing venue. Korea’s complex urban environments, advanced communications infrastructure and track record of early regulatory adoption make it an increasingly attractive stage for global mobility companies to validate new technologies.

Korea’s manufacturing base is another core asset. The country holds world-class competitive strength across batteries, internal combustion engines and automotive electronics. In batteries, three of the global top ten companies—LG Energy Solution, SK On and Samsung SDI—are Korean, and Korean batteries secure a commanding presence in the global market. Korea’s internal combustion engine industry has gradually improved its image beyond “value-for-money” positioning and continues to rank among Korea’s leading export industries. In automotive electronics, Korean companies have built highly competitive capabilities in automotive MLCCs, camera modules and several other key components, reinforcing Korea’s role as an important supplier in the global automotive electronics supply chain.

The export performance of eco-friendly vehicles (including hybrid, electric and plug-in hybrid models) is particularly striking. Export figures surged 17.7% compared to 2024, representing a remarkable growth trajectory for the industry.

Korea’s distinctive industrial structure—combining batteries, semiconductors and IT infrastructure—also serves as a powerful foundation for the transition to AI-centered mobility. Unlike many advanced economies, Korea’s mobility value chain, from materials and batteries through communications, electronics components and manufacturing, operates within a closely interconnected ecosystem rather than a fragmented one. This integration positions Korea well to make a rapid shift toward an AI-driven mobility paradigm.

Korea’s hardware competitiveness is substantial. But in the software and semiconductor capabilities that serve as the brain and nervous system of future vehicles, Korea lags behind the traditional automotive leaders. There are no fabless companies capable of designing high-performance AI chips for vehicles—the core of AI-enabled Software-Defined Vehicles (SDVs)—and the ecosystem of firms specializing in automotive operating systems, middleware and related software still needs to mature. The commercial ecosystem needed to bring future vehicles to market is similarly underdeveloped, and strict regulatory frameworks continue to slow the development of autonomous driving technology.

The next five years will be a golden window—a critical period for Korea to solidify its formidable position in the global mobility industry. Amid intensifying global competition, further advancing proprietary software capabilities for vehicles and autonomous driving while building a robust AI-centered mobility ecosystem will be key to securing its future competitiveness. Ultimately, how quickly Korea can translate an AI- and software-first innovation strategy into execution—within a system of autonomous cooperation among people, vehicles and infrastructure—will further cement its status as a key innovator in the market.