Government Provides Up to 19 Million KRW Subsidy for Electric Vehicles... No Support for Prices Exceeding 90 Million KRW

[Asia Economy Reporter Kwon Haeyoung] The government is expanding subsidy payments to promote the spread of electric vehicles. Electric passenger cars can receive up to 19 million KRW, and hydrogen passenger cars up to 37.5 million KRW in support. Subsidy unit prices for commercial vehicles such as ultra-small cargo vehicles and taxis will be raised. To encourage price reductions for electric vehicles, no subsidies will be provided for electric vehicles priced over 90 million KRW.

The Ministry of Trade, Industry and Energy, the Ministry of Economy and Finance, and the Ministry of Environment announced on the 21st that they will completely overhaul the zero-emission vehicle subsidy system in 2021 and supply a total of 136,000 vehicles this year, including 121,000 electric vehicles and 15,000 hydrogen vehicles. This represents an increase of 21.4% for electric vehicles and 49.2% for hydrogen vehicles compared to the previous year.

The budget for electric vehicle support is 1.023 trillion KRW, and 365.5 billion KRW for hydrogen vehicles. To provide a convenient charging environment, 31,500 electric vehicle chargers (1,500 fast chargers, 30,000 slow chargers) and 54 hydrogen charging stations (25 general, 21 special, 8 expansions) will also be established.

First, subsidies for ultra-small cargo vehicles, which have high demand from small and medium-sized enterprises and small business owners struggling due to the novel coronavirus (COVID-19), will be raised from the previous 5.12 million KRW to 6 million KRW. Ten percent of the total cargo volume will be separately allocated to small and medium-sized enterprises for distribution. An additional 2 million KRW subsidy will be provided for electric taxis, which have a long driving range and a high effect on improving air quality.

Support for high-performance and high-efficiency vehicles will also be strengthened. First, the proportion of energy consumption in calculating electric vehicle subsidies will be increased from the existing 50% to 60%, and incentives of up to 500,000 KRW will be given to energy-efficient vehicles with excellent low-temperature driving range compared to normal temperature. Local government subsidies will also be differentiated proportionally according to the national subsidy calculated based on electric vehicle performance, expanding the range of support differences by model.

Incentives for companies will also be expanded. To induce price reductions for electric vehicles and foster popular affordable models, subsidy support criteria will be differentiated by price range as follows: full support for vehicles under 60 million KRW, 50% support for vehicles priced between 60 million and 90 million KRW, and no support for vehicles over 90 million KRW. Subsidies for vehicles of companies subject to the low-emission vehicle supply target system will also be differentiated according to the achievement rate of the target.

In addition, the supply volumes of electric buses, electric cargo vehicles, and hydrogen buses will be greatly expanded to 1,000 units, 25,000 units, and 180 units respectively, and subsidies for a hydrogen truck pilot project will be newly established. While supporting 30,000 slow chargers for electric vehicles, partial hydrogen fuel purchase costs will be newly supported for deficit-operating hydrogen charging stations.

The government stated, "According to the revised contents this time, subsidies will be executed without fail to popularize zero-emission vehicles and achieve carbon neutrality in the transportation sector early," and added, "We will continue to actively respond to market conditions and demand changes and operate the subsidy system considering predictability and consistency."