Changes soon to come in Korea's EV subsidy plan

Hyundai Motor's Ioniq 6 displayed at the 2022 Los Angeles Auto Show held in November [HYUNDAI MOTOR]

The price ceiling of electric cars in Korea qualifying for a full subsidy will go up from the previous 55 million won ($44,000) to 57 million won starting this year.

As the government plans to grant bigger subsidies to electric vehicles (EVs) from carmakers with better customer service capabilities, local EVs are expected to receive a bigger subsidy than imported ones.

The Environment Ministry announced last week that EVs that cost 57 million won or less will soon be eligible for an 100 percent subsidy from the central government, up from the previous 55 million won. The motion is set to be finalized Thursday.

The ministry cited the rising car prices, boosted by higher battery prices, for the increase.

For EV models that fall between 57 million won and 85 million won, subsidies will be 50 percent of the maximum possible value based on other factors. EVs that cost more than 85 million won will not be eligible for any subsidies.

The government subsidy offered to mid- to large-sized EVs was cut by 1 million won to 5 million won, compared to last year’s 6 million won.

Though the amount of each subsidy has been cut, the Environment Ministry aims to give out more subsidies, to 215,000 units of EVs, compared to 160,000 from last year.

The subsidy cap for small EVs will be 4 million won, and 3.5 million won for micro EVs.

Meanwhile, EVs with a driving range of less than 150 kilometers (93.2 miles) per single charge will only be eligible for 80 percent of the government subsidy.

Moreover, while cars with a range of over 400 kilometers per charge were rated the highest in the subsidy grading until last year, the mark in the latest plan has been moved up to 450 kilometers.

Starting this year, the government will also consider the carmakers’ customer service capabilities when granting subsidies.

Buyers of cars from automakers that run customer service centers and an online data management system for maintenance records will get a full subsidy, but those running service centers through contractors will get only 90 percent. Carmakers with service centers but no data management system will be eligible for 80 percent subsidies.

Therefore, foreign carmakers operating service centers through contractors will likely suffer a subsidy cut.

However, the ministry did add that if the carmakers fulfill certain requirements such as offering training for repair people, they will be able to get full subsidies.

A new incentive system will be implemented as well, in order to encourage the expansion of charging infrastructure.

EVs with vehicle-to-load technology — which enables the electricity remaining in the car's battery to be used to charge other electronic devices — will get an additional 200,000 won off.

With the government subsidy and incentives combined, the maximum amount of support that a single EV buyer can get will be 68 million won.

With additional requirements and standards employed for graded subsidies, the gap in the amount of subsidies between EV models is expected to grow as a result.

BY CHEON KWON-PIL, SHIN HA-NEE [shin.hanee@joongang.co.kr]