[Photo by Yonhap]

According to Pulse by Maeil Business News Korea,

The South Korean government has decided to expand electric vehicle (EV) subsidies until the end of the year, increasing the maximum grant per buyer to 7.8 million won ($5,812.22) from 6.8 million won. The subsidies will be provided to EV purchasers in proportion to EV discounts provided by manufacturers on the belief that the increase in subsidies will encourage price cuts.

The Ministry of Environment on Monday announced a plan to expand subsidies for electric passenger vehicles. The key is to temporarily expand the subsidy in proportion to the price reduction of electric passenger vehicles with a base price of under 57 million won, meaning this plan will not apply to EVs with a base price of over 57 million won. In other words, the subsidy target for EVs will remain the same, but the subsidy amount will be increased for a limited time.

For example, if a manufacturer provides a 5 million won discount for an electric passenger car that costs 56 million won and is currently eligible for a subsidy of 6.8 million won, an additional subsidy of 1 million won will be provided, resulting in a total subsidy of 7.8 million won. In this case, the actual purchase price, after accounting for local grants, is reduced by 6 million won to 41.4 million won from 47.4 million won.

Additionally, if a manufacturer offers a discount of 2 million won for an electric passenger car priced at 46 million won that is eligible for a national subsidy of 6.6 million won, an additional 350,000 won will be granted in national subsidies, bringing the total amount of subsidy to 6.95 million won.

This plan to expand EV subsidies will be applied until December 31.

The government has also expanded the number of units eligible for subsidies per corporation and individual business buyer. Originally, EV subsidies were confined to one purchase in two years, but multiple one-time EV purchases will be also subsidized going forward. Additionally, EVs for testing and research purposes, which were not eligible for subsidies, will now be subsidized through local government subsidy programs.

The authorities’ decision for subsidy expansion comes as the number of EVs sold has been declining amid the sluggish economy. The Seoul Metropolitan Government had decided to provide grants for a total of 13,688 electric passenger vehicles this year, but only 5,258 vehicles, or 38 percent, have been delivered to buyers to date.

By Hong Hae-jin and Choi Jieun

Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.

Source: Pulse by Maeil Business News Korea (September 26, 2023)