In 5 Years, 35% of Car Exports Will Be Eco-Friendly Vehicles... Electric Car Prices Reduced by 10 Million Won

Joint Strategy by Relevant Ministries for 'Future Vehicle Expansion and Market Preemption'
Reduction of Subsidies for High-End Electric Vehicles... Restrictions on Chinese Electric Buses
Lowering Component Costs... Target to Establish 450 Hydrogen Charging Stations by 2025

[Asia Economy Reporters Kim Bo-kyung and Moon Chae-seok] On the 30th, the government announced the 'Future Automobile Expansion and Market Preemption Strategy,' which presented practical measures to increase the supply and export of electric and hydrogen vehicles. The goal is to establish a future car-friendly social system by 2025 through three major innovations in convenience of use, price, and demand.

As of the end of September this year, the cumulative number of electric vehicles supplied domestically was 120,000 units, and hydrogen vehicles totaled 9,494 units. The government plans to cumulatively supply 1.13 million electric vehicles and 200,000 hydrogen vehicles within five years. The export targets are 460,000 electric vehicles, 70,000 hydrogen vehicles, and 300,000 hybrids. The aim is to convert 35% of exported finished vehicles to eco-friendly vehicles. In particular, hydrogen vehicles will be intensively exported to countries with charging station infrastructure such as Northern Europe and North America. The government designated 2022 as the 'first year of future car popularization,' when the sales share of electric and hydrogen vehicles will increase to 10%, and presented a vision to build a future car-friendly social and industrial ecosystem by 2025.

◆Creating a constant charging environment for electric vehicles like mobile phones= First, a living charging environment will be created so that electric vehicle users can charge their vehicles constantly like mobile phones. By 2025, 500,000 slow chargers and outlets will be installed mainly at living hubs such as residences and workplaces. To this end, the obligation to install electric vehicle chargers will be expanded and newly established for new and existing buildings. Additionally, 15,000 fast chargers will be installed at mobility hubs such as highway rest areas by 2025, and ultra-fast chargers capable of charging up to 80% within 20 minutes will be built. Currently, 50,642 slow chargers and 8,989 fast chargers are installed nationwide.

The goal is to cumulatively build 450 hydrogen charging stations by 2025. In particular, 53 stations will be installed in the Seoul metropolitan area, where charging stations are insufficient compared to hydrogen vehicles, by 2021. Furthermore, a special purpose corporation (SPC) will be established centered on finished car manufacturers and energy suppliers to build 35 commercial vehicle charging stations starting next year. To facilitate parking, eco-friendly vehicle-exclusive parking spaces will be preferentially expanded in public institutions and public parking lots. The government plans to initiate legal amendments to increase eco-friendly vehicle-exclusive parking zones to more than 5% by 2021. Notably, COEX, Korea Electric Power Corporation, and E-Mart are promoting flagship projects to voluntarily expand electric charging infrastructure and exclusive parking spaces.

[Image source=Yonhap News]

◆Electric vehicle prices to drop by 10 million KRW in five years... Bus owners to set minimum self-payment= The government will lower the price of eco-friendly vehicles and reform subsidies and tax support. A government official stated, "To secure the economic feasibility of eco-friendly vehicles compared to internal combustion engine vehicles, the public and private sectors will cooperate to innovate technology." Through this, manufacturers are expected to reduce parts unit costs and lower electric vehicle prices by 10 million KRW by 2025.

Currently, the price of the electric vehicle Kona (64 kWh) is about 47 million KRW, but with a subsidy of 12 million KRW applied, it can be purchased for 35 million KRW. By 2025, the vehicle price alone will drop by 10 million KRW, allowing purchase in the 25 million KRW range. An official from the Ministry of Trade, Industry and Energy explained, "Considering fuel costs and tax benefits, consumers will be able to enjoy economic feasibility similar to internal combustion engine vehicles." The government plans to extend tax support for electric vehicles until the end of 2022 and actively review the re-extension of tax support for hydrogen and electric vehicles.

Considering public sentiment, subsidies for high-priced vehicles will be limited. An official from the Ministry of Environment said, "To popularize electric vehicles, we will create a structure where incentives go to mid-to-low-priced electric vehicles with excellent performance," adding, "The intention is also to induce manufacturers to lower price levels." He added, "It's not about giving subsidies to some and not to others, but supporting the public to buy high-performance and affordable electric vehicles." Next year, subsidies for electric taxis will increase by 2 million KRW compared to passenger cars, the number of supported electric trucks will increase to 25,000 units, and subsidies for hydrogen trucks will be newly established.

On the other hand, to improve the issue where Chinese electric buses swept subsidies through low-price strategies, a minimum self-payment will be set for bus transport companies. According to the Korea Automobile Manufacturers Association, in the first half of this year, Tesla's passenger car subsidy receipts accounted for 43% of the total electric passenger car subsidies, amounting to about 90 billion KRW. Also, Chinese electric buses took 34.9% of electric bus subsidies, equivalent to 5.9 billion KRW.

◆Public-private cooperation for future car transition... 1,000 parts companies to be advanced= By 2030, 1,000 auto parts companies will be transitioned to the future car sector to advance parts companies centered on internal combustion engine vehicles. The number of parts companies approved for business restructuring under the Corporate Vitality Enhancement Act will increase from 13 this year to over 100 by 2022. Finished car manufacturers will identify about 60 parts companies wishing to transition to future car parts among their first and second-tier suppliers and focus on supporting technology development and intellectual property acquisition together with the government.

To enable the private sector to continuously launch eco-friendly commercial vehicles, the government will continue to support parts and materials development and demonstration. The government will provide 8 billion KRW by 2021 for the development and demonstration of 5-ton hydrogen cleaning vehicles, 1 billion KRW by 2022 for the demonstration of 10-ton hydrogen cargo vehicles, and 17.1 billion KRW by 2023 for the development of 10-ton hydrogen special vehicles. Domestic manufacturers plan to complete the commercial vehicle lineup, including 5 to 23-ton hydrogen trucks and hydrogen metropolitan buses, by 2024.

Meanwhile, technologies, infrastructure, and systems for activating autonomous driving services will also be proactively prepared. The private sector plans to launch partially autonomous vehicles by 2022 and commercialize fully autonomous vehicles by 2024. The government will establish infrastructure necessary for the safe operation of autonomous vehicles, such as building C-ITS on all highways and major arterial roads by 2025.

This content was produced with the assistance of AI translation services.