Electric Vehicle Subsidies Cut by Up to 1 Million KRW Without AS Center... 5 Million KRW Subsidy for Cars Priced Below 57 Million KRW

[Asia Economy Sejong=Reporter Dongwoo Lee] From this year, electric passenger cars from companies that do not operate direct or partner after-sales service (AS) centers will have their subsidies cut by up to 20%. The electric vehicle subsidy has been finalized at 5 million KRW, down 1 million KRW from the previous 6 million KRW. The vehicle price standard has been raised from 55 million KRW to 57 million KRW, and the number of eligible vehicles has increased by 31%. While the subsidy per vehicle has been lowered, the expansion of eligible vehicles aims to strengthen the spread of electric vehicles.

The Ministry of Trade, Industry and Energy, the Ministry of Environment, and the Ministry of Economy and Finance announced the 2023 electric vehicle subsidy reform plan with these details on the 2nd. The key point of this year's electric vehicle subsidy reform is that, except for ultra-small vehicles, the performance subsidy will be differentiated based on the presence or absence of an after-sales management system.

For example, if an automaker operates a direct service center and manages maintenance history through a computerized system, it is classified as 'After-sales Management System Grade 1' and receives 100% of the subsidy. If the service center is operated through a partner company and a computerized system exists, it is Grade 2 and receives 90%. If there is a service center either direct or partner but no computerized system, it is Grade 3 and receives 80% of the subsidy.

For electric passenger cars, the basic price standard for full subsidy payment has been raised by 2 million KRW from 55 million KRW to 57 million KRW. The subsidy cap remains at 85 million KRW or less. Electric passenger cars priced between 57 million KRW and 85 million KRW receive half the subsidy. The performance subsidy (driving range and fuel efficiency subsidy) for electric passenger cars is regulated by categories: large, small, and ultra-small. For large vehicles, the cap is 5 million KRW, down 1 million KRW from last year’s 6 million KRW. The cap for small electric vehicles is 4 million KRW, and for ultra-small vehicles, it is 3.5 million KRW, down 500,000 KRW. Full subsidy is only available if the single-charge driving range is 450 km or more. Electric passenger cars with a driving range under 150 km receive half the subsidy. Low-income groups and small business owners receive an additional 10% of the calculated amount, and ultra-small electric passenger cars receive an additional 20% support.

The 'Supply Target Achievement Subsidy' amount, given when 10 automakers subject to the low-emission vehicle supply target system meet their targets, has been increased from 700,000 KRW to 1.4 million KRW. The 10 automakers include five domestic manufacturers?Hyundai, Kia, Ssangyong, Renault, and Korea GM?and five foreign manufacturers?Mercedes-Benz, BMW, Volkswagen, Toyota, and Honda.

The subsidy caps for electric buses and other electric vans remain at 70 million KRW for large and 50 million KRW for medium-sized vehicles. A plan to differentiate subsidies based on 'battery density' has been introduced. If battery density is 500 kW or more per liter, the performance subsidy is fully supported at 67 million KRW for large and 47 million KRW for medium-sized vehicles. However, if battery density is between 450 kW and less than 500 kW, 90% is paid; between 400 kW and less than 450 kW, 80%; and below 400 kW, only 70% is paid.

For electric vans, subsidies vary depending on the presence of maintenance and parts management centers and computerized maintenance history management centers. Considering the market characteristics of electric vans, it was decided not to distinguish whether the maintenance and parts management centers are operated directly or by partner companies. For electric cargo vehicles, the subsidy caps are reduced by 500,000 to 2 million KRW compared to last year: 12 million KRW for small, 9 million KRW for compact, and 5.5 million KRW for ultra-small. The previous basic subsidy of 5 million KRW for small vehicles has been abolished, and subsidies are paid entirely based on performance, with differentiated payments up to a single-charge driving range of 250 km.