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Korean gov’t to cut EV subsidies next year

Collected: 2023.08.31

Distributed: 2023.09.01

Source: Go Direct

[Image source: Gettyimagesbank]

The South Korean government will reduce subsidies for electric vehicles by 1 million won ($756) per vehicle starting next year. The government has allocated a reduced budget based on its assessment that EV distribution has reached a certain level. However, the budget for EV charging stations will be increased.

According to the Ministry of Environment on Wednesday, subsidies for electric passenger cars next year will decrease to 4 million won per vehicle from the current 5 million won, resulting in a reduction of 1 million won. Support for electric cargo trucks will also decrease from 12 million won to 11 million won.

It is expected that subsidies from local governments will also decrease following the central government’s announcement of support for those local bodies.

Government subsidies have played a pivotal role in expanding the EV market up until now, but manufacturers’ marketing strategies are expected to matter more from now on.

The competition to sell vehicles before the subsidy cuts by the end of the year is also heating up. The industry plans to increase the lineup of affordable EVs equipped with relatively inexpensive lithium iron phosphate (LFP) batteries.

“The recent release of affordable EVs using Chinese-made LFP batteries has seemingly led to a reduction in government subsidies. Price competition in the market is likely to intensify next year,” said Park Chul-wan, a professor at Seojeong University.

By Park So-ra and Chang Iou-chung

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