Ministry of Environment (ME) has decided to change standards for payment of government subsidy for electric vehicles to ‘first-come-first-served based on registration and release date of cars’ this year. Its standards changed for the first time when they were based on submission of documents for purchase since 2013. It has decided to change standards in order to prevent some companies from acquiring subsidy in advance regardless of actual delivery of electric vehicles and to increase fairness within markets according to limited budget for supplies (20,000). Because Jeju, Seoul, and Daegu, which have the most assigned supplies in South Korea, are expected to adopt these standards, it is expected that many will have battles that were never seen before in order to obtain subsidy for electric vehicles.
ME held ‘2018 Presentation on Policy of Eco-Friendly Vehicles Dissemination’ for local governments, electric vehicle manufacturers, and charging station industries at International Conference Room of The Korea Chamber of Commerce & Industry on the 22nd and decided and announced guidelines for standards for payment of subsidy.
According to its plan, people who are trying to purchase electric vehicles need to submit applications for purchasing electric vehicles to corresponding jurisdictions and they can receive subsidy if their vehicles are released within two months from submission of applications. For local governments that have large supplies, it is possible to disseminate based on first-come-first-serve of car registration without ‘two months’ period. On the other hand, local governments that have small supplies can choose a lottery method. ME emphasized that there will not be any exceptions other than these methods.
Although this plan will be effective once every local governments adopt this plan, Jeju (3,661), Seoul (2,491), and Daegu (2,351) are planning to adopt this plan that is based on registration and release date of cars.
“Although our assigned supplies is quite huge compared to other areas in South Korea, they are still not significant compared to recent market responses and demands.” said a representative for a metropolitan government. “First-come-first-serve dissemination based on timing of release will be inevitable as number of people who apply for subsidy will skyrocket in this year.”
Competitions for securing subsidy from South Korean Government are expected to become very intense. It is likely that there will be people who give up on purchase by not receiving subsidy even if they pre-ordered electric vehicles through manufacturers. This new plan will lead to people preferring older electric vehicles, which have faster release dates than newer models, rather than mileage of newer electric vehicles. Subsidy from ME for 2018 will be between $9,505 and $11,215 (10.17 million KRW and 12 million KRW). Local governments will give additional subsidy ranging from $4,112 to $10,281 (4.4 million KRW and 11 million KRW).
ME also announced that it will be adding three more businesses that are related to charging of electric vehicles on top of its current five businesses this year in order to greatly increase number of public charging infrastructures in order to handle increasing private demands. It is going to add them through an announcement that will be made sometime this month.
On the other hand, Hyundai Motor Company’s Kona EV’ and Kia Motors’’Niro EV’ will be delivered starting from May and June respectively. Renault Samsung’s ‘SM3 Z.E.’, which is an older model but have increased battery capacity, and Kia Motors’ ‘Soul EV’ can be delivered starting from next month. GM’s ‘Bolt’ will be delivered starting from April in an order.
Hyundai Motor Company and Korea GM received a separate written promise during recently pre-order period that they are not going to be guaranteed to receive subsidy from South Korean Government. South Korean Government took this measure to let people know in advance that they are not going to be guaranteed subsidy even if they pre-order electric vehicles.
Staff Reporter Park, Taejoon | gaius@etnews.com