When the government subsidizes electric vehicle consumers, it has revealed a plan to pay only 50% of the standard amount if the vehicle price is 60 million to 90 million won. If the price of the vehicle exceeds 90 million won, no subsidies are given. The industry believes that the government’s subsidy policy will affect the prices of new electric vehicles that Hyundai-Kia Motors will introduce in the first half of this year.
Electric vehicle subsidy up to 8 million won
Full payment for less than 60 million won
If it exceeds 90 million won, don’t give me a dime
It seems to affect the industry’s factory price
According to the automobile industry on the 3rd, the Ministry of Environment has entered into an administrative notice from December 30 last year on the revised bill of ‘2021 Electric Vehicle Supply Business Subsidy Business Handling Guidelines’. The revised bill contained the content of differential subsidies for each electric vehicle price. The price range is divided into three stages: less than 60 million won, 60 million to 90 million won, and more than 90 million won.
Additional points (coefficients) and incentives (preferential benefits) are given to vehicles with excellent electric vehicle fuel economy (electricity) and low-temperature mileage. When the fuel economy subsidy (up to 4.2 million won) and mileage subsidy (2.8 million won) are combined, the maximum is 7 million won. In addition, the implementation subsidy (up to 500,000 won) and energy efficiency subsidy (up to 500,000 won) are additionally provided. Last year, government subsidies for nine electric vehicles, including Hyundai, Kia, GM Korea, Renault Samsung, and Tesla, averaged KRW 7.76 million (excluding subsidies from local governments).
This year’s total budget for electric vehicle subsidies was 1.5 trillion won, up 28% from last year (818.8 billion won). The industry estimates that 525 billion won will be allocated to electric vehicles and 400 billion won to electric trucks, respectively. The government’s goal is to supply 75,000 electric vehicles and 25,000 electric trucks this year. The government subsidy per electric truck is 16 million won (excluding local government subsidies), which is 2 million won less than last year. The Ministry of Environment is planning to finalize it within this month after hearing opinions from various fields on the revised electric vehicle subsidy by the 19th.
Only Hyundai and Kia Motors produce electric trucks in Korea. Hyundai’s Porter Electric and Kia’s Bongo EV (electric vehicles) sold about 13,000 units from January to November last year. Last year’s total sales are estimated at 15,000 units. He benefited from subsidies to electric trucks in the government’s additional budget for the second half of last year.
Germany gives a subsidy of 4,000 euros (about 5 million won) to electric vehicles under 40,000 euros (about 53 million won). France subsidizes electric vehicles under €60,000. “The differential method by price (subsidy) is a desirable direction to increase the spread of electric vehicles,” said Pilsoo Kim, a professor at Daelim University.
When the government subsidies are cut in half for electric vehicles with vehicle prices exceeding 60 million won, the burden on consumers increases. According to the amendment to the Ministry of Environment, when calculating the subsidy standard, the vehicle price is the ex-factory price, excluding VAT, plus individual consumption tax (5% of vehicle price) and education tax (30% of location tax). It is unclear whether the long range (64.79 million won), the most-selling model of Tesla Model 3, will be able to meet the full subsidy baseline (less than 60 million won). A government official said, “We have to weigh the exact’vehicle price’ (for subsidies).”
Tesla has experience in making strategic choices following subsidy policies in foreign markets. China limited vehicles subject to electric vehicle subsidies to less than 300,000 yuan (about 50 million won) last year. Then, Tesla lowered the model 3 shipment price by 10% from 320,000 yuan to 290,000 yuan. Lee Hang-gu, a research fellow at the Korea Automobile Research Institute, said, “Tesla continues to lower battery prices, so there will be room for (vehicle) price cuts.”
Reporter Kim Young-joo [email protected]