President Yoon Suk-yeol waves during a teleconference with Tesla CEO Elon Musk at the presidential office in Seoul in this Nov. 23, 2022 file photo. Courtesy of the presidential office

Tesla, SpaceX unlikely to expand presence here

By Park Jae-hyuk

President Yoon Suk Yeol's teleconference last November with Tesla CEO Elon Musk appears to have ended fruitlessly, as the U.S. electric vehicle (EV) manufacturer is about to build its second Asian Gigafactory in Indonesia, instead of Korea, according to foreign news outlets, Thursday.

Bloomberg News reported on Wednesday that Tesla is close to a preliminary deal to set up its plant in Indonesia with an annual capacity of 1 million units, citing people familiar with the matter.

The report was published amid the intensifying competition among dozens of municipal governments in Korea to attract the U.S. carmaker's manufacturing facility. They began engaging in the competition after Musk told Yoon that Korea is "one of the top choices" for his company's investments, during their 30-minute virtual meeting on Nov. 23.

The central government also claimed that it would work closely with Tesla to attract investments from the company, organizing a taskforce comprised of officials from the Ministry of Trade, Industry and Energy and the Korea Trade-Investment Promotion Agency (KOTRA).

Asked about whether Korea's attempt to attract Tesla's factory ended in failure, the trade ministry told The Korea Times that Tesla said the Bloomberg News article was groundless. Musk also commented on a tweet referencing the report on Wednesday, "Please be cautious about writing articles citing 'unnamed sources,' as they are frequently false."

Automobile industry experts, however, regarded the Tesla CEO's remarks on Korea as mere lip service, expecting Tesla to build its Gigafactory in Southeast Asia, due to the region's rich deposits of minerals for EV batteries as well as the issue of Korea's militant labor unions.

"What Musk hates most is labor unions," Daelim University Division of Automotive Engineering professor Kim Pil-soo said. "Labor costs are more expensive in Korea than in Southeast Asia. In addition, Tesla will seek to sell vehicles produced in its second Gigafactory to Southeast Asian nations, so it would be better for the company to just import batteries from Korea."

Indonesian President Joko Widodo, left, talks with Tesla CEO Elon Musk at the SpaceX launch site in Texas in this May 2022 file photo. Courtesy of Indonesia's presidential palace

Delayed launch of Starlink service in Korea

SpaceX, a U.S. spacecraft manufacturer owned by Musk, also delayed the launch of Starlink's satellite internet service in Korea, despite Yoon's proposal to cooperate regarding the telecommunications business with the U.S. billionaire's firm.

Last October, SpaceX posted on Starlink's official website that the company would start offering its satellite internet service in Korea from the first quarter of this year.

The announcement was made after the U.S. firm categorized Korea last June as a country where its satellite internet service was "coming soon," due to "pending service coverage or regulatory approval."

According to its website, however, the launch of the Starlink service in Korea was delayed to the second quarter, causing speculation that SpaceX is facing a setback in complying with Korea's tough regulations. The company launched the service in Japan last October as planned.

The official website of Starlink shows that its satellite internet service will be available in Korea by the second quarter of 2023. Screenshot from Starlink's website

To offer Starlink in Korea, SpaceX would have to apply for the use of a certain frequency band and register as a key telecommunications business operator, both of which would take a considerable amount of time to process. Being a foreign company, it would also need to establish a subsidiary in Korea to qualify for registration.

Although the company reportedly hired a Korean law firm to overcome these entry barriers, the Ministry of Science and ICT said SpaceX has not made additional inquiries, since its senior manager in charge of market access visited the ministry last year to enquire about the regulations on offering satellite internet services in Korea.