Local Government Sales Subsidies Depleted... Government Budget Needs Further Expansion

Seoul City’s First Half Budget Fully Spent... Supplementary Budget
Many Give Up Purchasing Due to Missed Benefits

[Asia Economy Reporter Ki-min Lee] As demand for eco-friendly vehicles such as electric cars continues to rise, local governments including Seoul have allocated supplementary budgets, but this year’s subsidies for eco-friendly vehicle sales are running out.

Due to semiconductor supply shortages delaying vehicle deliveries, some customers who signed contracts earlier this year have not received subsidy benefits, and some have even given up on purchasing eco-friendly vehicles. This has led to calls for the government to further expand subsidies.

According to the status of electric vehicle subsidy support on the Low Emission Vehicle Integrated Website and industry sources on the 6th, Seoul initially allocated subsidies for 5,367 electric vehicles in its main budget this year, but after these were fully exhausted in the first half of the year, it prepared a supplementary budget to add subsidies for 9,643 electric vehicles (including 495 cargo vehicles). Additionally, the subsidy amount was lowered from 4 million KRW to 2 million KRW, but even this has nearly run out.

Other local governments are in similar situations. Among the 161 local governments currently providing electric vehicle subsidies, only 88 still have remaining subsidies. Industry experts predict that most of these local governments, excluding small provincial cities, will exhaust their electric vehicle subsidies allocated for this year.

In the case of hydrogen vehicles, subsidies have already been fully exhausted in Sejong City and some areas of Gangwon Province, and not only metropolitan local governments such as Busan, Ulsan, and Gwangju but also cities like Pyeongtaek and Hwaseong in Gyeonggi Province are running out of subsidies.

The industry believes that if the eco-friendly vehicle subsidy budget is reduced or maintained at the current level, it could lead to a sharp decline in sales, so the budget should be expanded. For example, in China, where the electric vehicle market grew by more than 50% annually, the market shrank by about 10% after subsidies were cut in the second half of 2019.

Jung Manki, president of the Korea Automobile Manufacturers Association, pointed out, "To increase the spread of eco-friendly vehicles, the government should optimize the budget to increase subsidy payments and simultaneously expand charging stations."

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