Subsidies for EVs could see some changes

Electric vehicle Genesis GV60 on display in Seoul in October. [YONHAP]

Mr. Lee, 45, ordered a Genesis GV60 electric vehicle (EV) last November. He's enthusiastic about it being good for the environment, and doesn't even mind the 59.9 million won ($50,000) sticker price.

But he may cancel the order.

The government offers subsidies for EV purchases to encourage people to buy them and cut carbon emissions. Last year, the full subsidy was offered for any EV under 60 million won.

This year, the ceiling may be cut to 55 million won.

Last year, Mr. Lee would have gotten the full subsidy of 8 million won. This year, his vehicle may be only eligible for a subsidy of 3.5 million won.

“Because of the backlog, I’ll be getting the car later this year,” Lee said. “The subsidy may be reduced by 4.5 million won.”

Lee said he’s considering cancelling his order and purchasing a German hybrid.

The Ministry of Trade, Industry and Energy and the Ministry of Environment announced changes to EV subsidies on Wednesday.

However, the changes are not final and the government is canvassing public opinion through Jan. 25.

Under the proposed changes, the maximum subsidy that an EV buyer can receive has been lowered from 8 million won to 7 million won. The full subsidy will be offered on cars costing 55 million won or less.

Previously, vehicles selling for between 61 million and 90 million won were eligible for half the subsidy. This year, that bar has been lowered to vehicles selling for between 56 million won and 85 million won.

Prices of EVs on the local market are partly determined by the subsidies offered.

In the case of the Genesis GV60, when the government set the ceiling for the full subsidy at 60 million won, its price was set at 59.9 million won.

Earlier, buyers could get the full 8 million-won central government subsidy and additional subsidies offered by some local governments.

The city of Seoul offered subsidies of 2 million won.

Therefore, a GV60 bought in Seoul would qualify for a 10 million won subsidy.

The government says its changes to the subsidy are meant to encourage purchases of less expensive EVs -- and also bring down their price.

The government estimates that 75,000 vehicles received the government EV subsidy last year, which will increase to 164,000 in 2022.

The changes could have a negative impact on sales of high-end EVs such as the Genesis GV60.

Some potential buyers are already considering switching to Tesla, which never qualified for the maximum subsidy.

With the proposed change, the GV60 will be eligible for the same 3.5 million-won subsidy as Tesla’s Model 3 .

Lee Hang-koo, a researcher at the Korea Automotive Technology Institute, said automakers will compete on the price of their vehicles to make sure they get at least the 50 percent subsidy.

BY BAEK MIN-JEONG, LEE HO-JEONG [lee.hojeong@joongang.co.kr]