Increasing Affordable and High-Performance Electric Cars... No Subsidy for High-End Vehicles Priced at 90 Million Won

Joint Announcement on the 8th by Related Ministries: 'Zero-Emission Vehicle Purchase Support System Reform Plan'
Subsidy for Ultra-Compact Cargo Vehicles Raised to 6 Million KRW for Small Businesses
Up to 500,000 KRW Incentive, Enhanced Subsidies for High-Performance and High-Efficiency Vehicles
Up to 10 Million KRW Support for Electric Taxis... 100 Million KRW Self-Payment for Low-Cost Electric Buses

Tesla Model S vehicles displayed in front of the Tesla store in Cheongdam-dong, Gangnam-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Starting this year, buyers of high-priced electric vehicles costing 90 million KRW or more, such as the Tesla Model S, will no longer receive purchase subsidies. The government plans to use this measure to encourage price reductions and promote the popularization of electric vehicles.

On the morning of the 8th, the government announced the 'Zero-Emission Vehicle Purchase Support System Reform Plan' at the 2nd Innovation Growth BIG3 meeting chaired by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki. Deputy Prime Minister Hong stated, "Considering the rapid global shift of the automobile market towards electric and hydrogen vehicles (zero-emission vehicles), we have prepared measures to expand and reform the purchase support system to accelerate the domestic market transition."

This plan includes ▲strengthening support for high-performance and high-efficiency vehicles ▲expanding the supply base for the popularization of zero-emission vehicles ▲and increasing the supply of commercial vehicles such as electric and hydrogen buses that have a high air quality improvement effect.

This year, the budget for supporting electric and hydrogen vehicles is set at 1.023 trillion KRW and 365.5 billion KRW respectively, totaling 1.3885 trillion KRW. This is a 32% increase compared to last year's budget of 1.05 trillion KRW. The support volume for this year is 136,000 units (121,000 electric vehicles and 15,000 hydrogen vehicles), which is 26,000 units more than last year.

Full Subsidy for Electric Vehicles Priced Under 60 Million KRW

First, starting this year, subsidies will be provided differentially based on the price of electric vehicles. High-priced electric vehicles costing 90 million KRW or more are excluded from subsidy eligibility. This includes Tesla Model S, Mercedes-Benz EQC, Audi e-tron, among others. Electric vehicles priced between 60 million KRW and under 90 million KRW will receive 50% of the subsidy amount. Tesla Model 3 (LR, Performance), BMW i3 fall into this category.

Electric vehicles priced under 60 million KRW will receive the full amount of the calculated subsidy. Examples include Hyundai Kona, Kia Niro, Tesla Model 3 (Standard), Renault Samsung ZOE, GM Korea Bolt, and Peugeot.

An official from the Ministry of Environment explained, "To encourage price reductions for zero-emission vehicles and focus on nurturing popular affordable models, subsidy support criteria have been differentiated by price range." The national subsidy for electric passenger cars this year is 7 million KRW per vehicle, which is 1 million KRW less than last year. However, the number of supported vehicles increased by 10,000 units to a total of 75,000 units compared to last year.

The implementation subsidy for vehicles of companies subject to the 'Low Emission Vehicle Supply Target System' will be provided differentially from 100,000 to 300,000 KRW depending on the achievement rate of the target. The Low Emission Vehicle Supply Target System mandates that companies sell a certain percentage of low emission vehicles, and 10 companies including Hyundai, Kia, GM Korea, SsangYong, Mercedes-Benz, and Audi are subject to this.

The subsidy for ultra-small cargo vehicles, which are in high demand among small business owners and self-employed individuals, will be increased from 5.12 million KRW to 6 million KRW, and 2,500 units will be separately allocated to small and medium-sized automobile manufacturers.

Additionally, 40% of the subsidy allocation will be assigned to companies participating in zero-emission vehicle leasing and rental, including K-EV100 (which aims to convert 100% of owned and leased vehicles to zero-emission vehicles by 2030), to accelerate corporate zero-emission vehicle transition.

Additional Subsidies for High-Efficiency Batteries and High-Performance Electric Vehicles in Winter

The government will strengthen subsidies for high-performance and high-efficiency vehicles to encourage improvements in zero-emission vehicle performance.

The weight of energy consumption efficiency (km/kWh), which reflects battery efficiency rather than driving range determined by battery capacity, will be increased from 50% to 60%. In other words, electric vehicles with higher battery efficiency will receive more subsidies.

To address the issue of reduced electric vehicle performance in winter, energy-efficient vehicles with superior driving range at low temperature (-7℃) compared to room temperature (23℃) will receive an incentive of up to 500,000 KRW.

For hydrogen vehicles, considering their early stage of adoption, the subsidy unit price (national subsidy of 22.5 million KRW) will be maintained.

Furthermore, the supply of commercial vehicles such as taxis, buses, and cargo trucks, which have a high air quality improvement effect, will be increased.

The supply volume of electric buses will be expanded to 1,000 units, but reflecting the trend of vehicle price reductions, the subsidy unit price for large buses will be lowered from 100 million KRW to 80 million KRW. To prevent market disruption caused by low-priced Chinese electric buses, a minimum buyer self-payment of 100 million KRW has also been set.

To expand the supply of electric taxis, subsidies of up to 10 million KRW will be provided, and the support volume for electric cargo vehicles mainly used by small business owners and self-employed individuals will be increased to 25,000 units.

The supply volume of electric two-wheelers will be expanded to 20,000 units, and the subsidy unit price of 2.6 million KRW for small electric two-wheelers mainly used for delivery will be maintained.

For hydrogen buses, considering their early stage of adoption, the subsidy unit price will be maintained (150 million KRW each from national and local governments), and the support volume will be increased to 180 units.

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