Electric Vehicle Subsidies: Increasing Domestic Cars and Reducing Imports... Gathering Opinions on Revision Plan

[Asia Economy Sejong=Reporter Dongwoo Lee] Next year, the government subsidy gap between domestic electric vehicles and imported electric vehicles is expected to widen.

According to related ministries on the 30th, the Ministry of Environment held a briefing session with the automobile industry on the 15th and began collecting opinions by sharing the plan to reform the electric vehicle subsidy system to be applied next year. The reform plan reportedly includes a measure to lower the national subsidy ceiling for all electric passenger cars from 7 million KRW to 6.8 million KRW.

The total upper limit of the fuel efficiency subsidy and driving distance subsidy will be lowered by 1 million KRW from the current level to 5 million KRW, and a 50% differential subsidy will be applied depending on whether the manufacturer operates a direct service center and a computerized system for maintenance history management and parts management. The main point is that electric passenger cars from manufacturers without direct service centers or with only partial computerized systems for maintenance history and parts management will receive only half of the fuel efficiency and driving distance subsidies. All domestic car manufacturers operate direct service centers, but foreign manufacturers, including Tesla, do not have direct service centers in Korea.

The reform plan also reportedly includes a measure to provide an additional subsidy of 150,000 KRW for electric vehicles equipped with 'Vehicle to Load' (V2L) technology, which allows power to be drawn from the electric vehicle battery for external use. Among electric vehicles currently released in Korea, only Hyundai Motor Group’s electric vehicles such as the Ioniq 5 are equipped with V2L. The plan also includes an additional subsidy of 150,000 KRW for electric vehicles from manufacturers that have installed more than 100 fast chargers in the past three years. Hyundai Motor meets this condition, and among foreign electric vehicle manufacturers, only Tesla and Mercedes-Benz are identified as meeting it.

According to the reform plan, the upper limit of the implementation subsidy given only to electric vehicles from companies subject to the Low Emission Vehicle Supply Target System will increase from 700,000 KRW to 1.5 million KRW. Specifically, the implementation subsidy given to electric vehicles from companies under the Low Emission Vehicle Supply Target System will rise from 300,000 KRW to 500,000 KRW, and the subsidy ceiling given when the company achieves the low-emission and zero-emission vehicle supply targets will increase from 400,000 KRW to 1 million KRW. The companies subject to the Low Emission Vehicle Supply Target System include Hyundai Motor, Kia Motors, Korea GM, Renault Samsung, Ssangyong, Mercedes-Benz, BMW, Toyota, Audi Volkswagen, and Honda, totaling 10 companies. If the reform plan is implemented as announced, the subsidy difference between domestic and imported electric vehicles will inevitably be at least 2.5 million KRW. Currently, only some electric vehicles from Hyundai Motor and Kia Motors receive the maximum national subsidy for electric passenger cars.

Foreign manufacturers are expected to oppose the electric vehicle subsidy reform plan. However, the Ministry of Environment stated that nothing has been finalized yet.

[Image source=Yonhap News]

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