Unprepared for the future

Yi Jung-jae
The author is a columnist of the JoongAng Ilbo.

About three years ago, a president of Korea’s top steelmaker posed an intriguing question. “What would be the biggest threat to Posco?” He shook his head at every possible answer — Chinese competition, trade wars, and even political power. The right answer was vehicles powered by artificial intelligence.

He predicted the day would come when cars will be primarily shared — not owned. Cars usually are used for two hours and parked idle for the rest of the day. Once self-driving vehicles become common, a single car can be shared by 10 different individuals. The plunge of automobile demand would be nearly devastating for steelmakers as they would lose their primary customers, which are carmakers. Posco, which has been maintaining a competitive edge over cheap Chinese products with its specialized steel plates, will have to look for other sources of revenue.

In a special report in its March edition, the Economist portrayed a more specific picture of the future about 20 years from now. By the year 2050, cars on the roads across the globe would be more than halved to 300 million vehicles from the current number, which is over 1 billion. Of them, 20 million would be driverless, it estimated. The future of autonomous vehicles is certain to disrupt the industry of the present. In Korea, the first signs of this transition surfaced with GM Korea and the taxi industry. The problems are all interlinked as the surge of autonomous vehicles is the very root of the change.

Let’s take a look at what happened to GM Korea. It recently decided to separate its research and development division from the company and turn it into a standalone entity. The labor union suspects the move is a harbinger of GM’s eventual pullout from Korea. The Detroit-based automaker actually exited from Australia, leaving just 300 R&D staff behind. State-lender Korea Development Bank (KDB), which has a 17 percent stake in GM Korea, is preparing to take legal steps to stop the move. The government stays put in fear of scaring GM away for good.

Actually, there are not many options left. As KDB Chairman Lee Dong-gull said, its deal with GM Korea should be deemed a “good deal” if the state lender is able to keep jobs for 15,000 GM Korea employees for 10 years with an 810 billion won ($750 million) bailout to enable the struggling company to stay afloat. It would be best for the state-run bank to fulfill its part in the agreement and deliver the money by the end of the year so that the American carmaker can keep its part. In April, the KDB agreed to chip in $750 million as part of a rescue package for the insolvent GM Korea in return for GM’s promise to stay in the country for the next 10 years.

But what will happen after 10 years? As fixed-line phones no longer exist in homes after mobile phones emerged, autonomous vehicles will certainly replace individually owned cars. Whether they are making electric or hydrogen fuel cell-powered cars, the entire Korean motor vehicle industry must change in the wake of the troubling evolution of GM Korea. It is time for Korea to become a hub for self-driving vehicles, which requires support from the government, unions and politicians. All the regulatory and vested powers of the mainstream should be surrendered. If we can pull this off, GM may beg to stay on in Korea after 10 years.

What about the car-sharing business our taxi industry vehemently opposes? No matter how many strikes taxi drivers launch, they cannot forestall the future. Ten years on, the taxi industry may cease to exist. The local taxi industry fended off Uber’s landing in Korea and also succeeded in toppling fledging domestic car-hailing services one by one. As many as 70,000 taxi drivers kept their cars at home and congregated in Gwanhwamun Square last week for a rally to oppose an independent car-sharing service recently launched by Kakao — the most widely used chat platform in Korea. Some are already betting Kakao also may be defeated.

In the introduction to the Korean edition of “Homo Deus,” Israeli historian Yuval Harai, the best-selling author of “Sapiens,” predicted that North Korea could probably become the first country in which all vehicles on roads are driverless. This is possible if the country opens up, as there is no mainstream car industry with vested interests. In the South, politicians who can hardly ignore the votes of 250,000 cab drivers will most likely pass any bills outlawing or restricting car-sharing services. There are three bills already on that theme pending in the National Assembly.

Korea remains the only country in which car-sharing is not allowed even as it has become a common means of getting around in most parts of the world. Once autonomous vehicles take charge of the roads after 10 years, Korea could become most vulnerable to foreign players like Uber and Grab since there is no home-grown hailing service in the country. It will be no use crying into our soju then. Before it is too late, the government, politicians and industries should work on finding ways for ride-sharing services and the taxi industry to co-exist. The regulations must come down first. Korea cannot usher in future mobility with its outdated rules from the days of smoke-belching factories.

JoongAng Ilbo, Oct. 26, Page 30