Tesla Model 3. Last year, more than 10,000 units were sold in the Korean market. Photos Tesla Korea
This year’s EV subsidy policy, which the industry and consumers watched closely, was outlined. For electric vehicles with more than 60 million won, only 50% of the subsidy is paid, and expensive cars with more than 90 million won are not given. The ’60 million won car’ at the fork is the Tesla Model 3, which dominated the Korean market last year, and the future response is drawing attention. Model 3’s popular trim,’Long Range,’ costs 64.79 million won. In addition, it is expected that it will have an impact on new cars that Hyundai and Kia will introduce from the first half.
How much is the subsidy for electric vehicles in 2021?
On the 30th of last month, the Ministry of Environment announced an administrative notice of an amendment to the ‘2021 Electric Vehicle Supply Business Subsidy Business Guidelines’. The main point is to give additional points (coefficients) and incentives to vehicles with excellent fuel economy (electric vehicle fuel economy) and low-temperature mileage. Fuel economy subsidy (up to 4.2 million won) and mileage subsidy (2.8 million won) are added up to 7 million won, plus performance subsidy (up to 500,000 won) and energy efficiency subsidy (up to 500,000 won). In addition, 100% of cars under 60 million won are paid based on the difference by price, while 50% of cars with 60 million to 90 million won and cars over 90 million won are excluded.
Last year, the average of government subsidies for nine electric vehicles including Hyundai, Kia, Korea GM, Renault Samsung and Tesla was 7.76 million won (excluding local governments). The Automobile Industry Association estimated that if the new method according to the amendment is applied, it will decrease by about 1 million won per unit. When the local government subsidy (about 50% of the government expenses) is added, the total subsidy for electric vehicles is about 11 million won.
Exclusive Hyundai Motor Company, supplying 25,000 electric trucks
Hyundai Porter electric truck. Last year, more than 8,000 units were sold in the domestic market. Photo hyundai car
According to the notice, the total budget related to subsidies by the central government was 1.5 trillion won, a 28% increase from last year (818.8 billion won, including an additional supplement). The Ministry of Environment did not disclose the budget allocated for each vehicle type. However, the industry expects to allocate 525 billion won for electric vehicles and 400 billion won for electric trucks, respectively. The goal is to supply 75,000 passenger cars and 25,000 electric trucks. After collecting opinions, the Ministry of Environment plans to make a final announcement within this month.
This year’s subsidy policy focuses on electric trucks rather than passenger cars. The 25,000 electric trucks are the largest domestic automakers can produce. Therefore, comments come out that’the government’s willingness to supply electric trucks is seen.’ Earlier, the government announced in October last year that it would expand the supply of electric trucks for reasons such as support for small businesses. The government subsidy for electric trucks this year is 16 million won (excluding local governments), which is 2 million won less than last year.
Only Hyundai and Kia Motors produce electric trucks, which is expected to be the biggest beneficiary. Hyundai’s Porter Electric and Kia’s Bongo EV recorded 13,000 cumulative sales until November of last year (January to November). When the last month’s performance was combined, it is estimated to be 15,000 units. I benefited from driving the subsidy budget secured through the supplementary administration in the second half of last year to electric trucks.
Tesla Model 3. Pictures tesla
This plan is a mixture of European and Chinese electric vehicle support methods. Germany gives a subsidy of 4,000 euros (about 5 million won) to electric vehicles under 40,000 euros (about 53 million won). France is eligible for less than 60,000 euros. In China, the upper limit of each price range and the fuel consumption of electric vehicles (electric vehicle fuel consumption) are paid accordingly.
“The differential method by price is a desirable direction to increase the spread of electric vehicles,” said Pilsoo Kim, a professor at Daelim University. “The method of paying half for cars over 60 million won will help prepare for the future premium electric vehicle market.”
The key is an electric car worth 60 million won. When government subsidies are cut in half, consumers will have to pay more for the car, and automakers will lose price competitiveness, which immediately affects sales. Among the cars that are currently on sale, the Tesla Model 3 falls within this price range, ranging from 54.79 million to 74.79 million won (the price posted on the website). In particular, the long-range trim that sold the most among the Model 3 was 6,479 million won, which is quite reasonable. According to the Ministry of Environment’s administrative notice, the’vehicle price’, which is the basis for subsidy payment, is the sum of the factory price, excluding VAT, plus the opening tax (5%) and education tax (30% of the opening tax). It may be different from the amount posted by the company on the website. A government official said, “We have to weigh the exact’vehicle price’.”
Ioniq 5 ’50 million won’ is safe?
The image of Hyundai Motor’s electric vehicle brand’Ioniq’. From left: Ioniq 6, Ioniq 7, Ioniq 5. Photos Hyundai Motor Company
Previously, Tesla had the experience of making strategic choices according to the subsidy policy of overseas markets. Last year, when China limited vehicles subject to electric vehicle subsidies to less than 300,000 yuan (about 50 million won), the model 3 factory price was reduced 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 price cuts.”
On the other hand, there is a view that it will remain unchanged when looking at Tesla’s aggressive pricing policies in the Korean market. Tesla raised prices twice last year. When the Model 3 was released in Korea in August 2019, the long range was 62.3 million won.
In the first half of the year, Hyundai Motor Company will release Ioniq 5, which applies E-GMP, an electric vehicle platform. According to the industry, the estimated price is expected to be around 50 million won, not exceeding the subsidy limit. However, the first electric car JW (project name) of the luxury brand Genesis is expected to be affected by the limit of 60 million to 90 million won. Existing volume models, Ioniq, Kona Electric (Hyundai Motor) and Niro EV (Kia Motors), are also irrelevant to this as the factory price is around 40 million won.
Meanwhile, high-priced electric vehicles with more than 90 million won excluded from subsidies this year include the Tesla Model S·X, Mercedes EQC, Audi e-tron, and Jaguar I-Pace. However, as the number of units sold per year is less than 1,000 and the proportion of corporate purchases is large, the impact of the subsidy policy is expected to be negligible.
Reporter Kim Young-joo [email protected]