Electric Vehicles Over 90 Million KRW This Year Won't Receive Subsidies...Differentiated Support Based on Price

On the 12th, the Tesla MODEL S was unveiled at 'EV Trend Korea 2018' held at COEX in Gangnam-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Bo-kyung] From this year, electric vehicles priced over 90 million KRW will no longer receive purchase subsidies.

The Ministry of Environment announced on the 4th that it has issued an administrative notice on the "2021 Electric Vehicle Supply Project Subsidy Handling Guidelines," which restricts subsidies for high-priced electric vehicles.

For electric passenger cars, subsidies will be provided differentially within a maximum range of 8 million KRW (including incentives), considering the vehicle's performance, whether the vehicle is from a company subject to the low-emission vehicle supply target system, and the achievement of supply targets. Local governments must also differentiate local subsidies proportionally to the national subsidies.

However, until now, there was no price limit when providing electric vehicle purchase subsidies, leading to criticism that expensive imported cars like Tesla were "sweeping" the subsidies.

The Ministry of Environment decided that from this year, electric vehicles priced over 60 million KRW will receive 50% of the national and local subsidies, and high-priced vehicles over 90 million KRW will be excluded from subsidy eligibility. The price is calculated by adding the individual consumption tax (5% of the vehicle price) and education tax (30% of the individual consumption tax) to the factory price excluding VAT and options.

The basic national subsidy amount will also decrease this year. The basic national subsidy per electric vehicle has been reduced from a maximum of 8 million KRW last year to 7 million KRW. This amount includes a maximum of 4.2 million KRW for fuel efficiency subsidies plus a maximum of 2.8 million KRW for driving range subsidies.

The list of eligible vehicle models and subsidy amounts will be posted on the Low Emission Vehicle Integrated Website (www.ev.or.kr). The Ministry of Environment plans to finalize the details after collecting opinions on the administrative notice by the 18th.