New subsidies, models to boost plug-in market

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New subsidies, models to boost plug-in market

The Korean plug-in hybrid electric vehicle (PHEV) market is set to take off in the third quarter of the year, as Hyundai Motor said it will begin selling its first PHEV Sonata sedan and the government announced it is considering subsidies for buyers who charge their vehicles at home.

The nation’s largest automaker said Thursday that the exact sales date hasn’t been determined, but expects the vehicle will be introduced between July and September. Other automakers are set to follow. GM Korea will introduce its Chevrolet Volt, while Audi plans to sell its A3 Sportback e-tron hatchback. Volkswagen hopes to attract consumers with its Golf GTE.

The Sonata PHEV uses a Nu 2.0 GDI engine that offers 156 horse power and a 50 kilowatts (kW) electric motor, as well as a six-speed automatic transmission. The model’s 9.8 kW hour lithium-ion polymer battery enables drivers to travel more than 40 kilometers (25 miles) without using any gas.

“Koreans drive an average of just 35.8 kilometers per day,” said a spokesman of Hyundai Motor. “It means that the Sonata PHEV can help drivers save big on gas money.”

While automakers are preparing their environmentally friendly options, the government is discussing what kind of support it will provide to consumers. Industry insiders say the key to the success of the PHEV market is high government subsidies.

“The government is currently considering giving 5 million to 6 million won [$4,600-$5,500] in subsidies to each PHEV buyer starting next year,” said a spokesman for the Environment Ministry on Thursday. “We hope to determine the necessary regulations by next month.”

Hyundai Motor said it is considering offering portions of the government subsidy for Sonata PHEV buyers this year, since the government benefit won’t come into effect until next year.

Currently, the government offers up to 4.1 million won worth of benefits - 1 million won in subsidies and roughly 3 million won in tax benefits - to buyers of hybrid vehicles that generate less than 95 grams of carbon dioxide per kilometer.

The question is whether the company’s first PHEV can beat out foreign competitors, particularly in price. According to Hyundai Motor executives, the Sonata will not be over 40 million won, meaning that consumers might be able to purchase the car around at 35 million won with the government subsidy. Considering that most imported cars are more expensive abroad than in their origin country, the Sonata could be an attractive option.

The Golf GTE hatchback is offered around at 43 million won in Germany while the Audi’s A3 Sportback e-tron is being sold at around 45 million won across Europe. The biggest competitor for Sonata would be GM Korea’s Volt because its price is expected to be under $30,000 in the United States, with a similar price in Korea.

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