Rapidly depleting EV state subsidy funds likely to slow EV sales in Korea

More than half of local governments in South Korea already ran out of this year’s subsidy funds for electric vehicle purchases, which could put the brakes on the country’s green car sales until the end of February next year when the new year’s state subsidies will be announced.

According to the Ministry of Environment and the Korea Environment Corporation on Sunday, 83 out of total 161 local governments, or 52 percent of all, spent the entire budget on subsidies for EV purchases as of Friday.

Among the metropolitan city governments, Busan, Daegu, Incheon and Ulsan used up all the savings. Seoul City Government that offered the most generous subsidies now is able to give its support to only 248 new buyers, and most of the others to a single digit.

Subsidies have been the biggest appeal to consumers seeking to buy EVs in Korea. The budget for EV subsidies is shared by the central and regional governments in the country. The central government’s electric car bonus is up to 8 million won ($6,756.76), and the regional governments offer a maximum 10 million won. This means nearly 20-30 percent of the price of an EV can be covered with state subsidies in Korea.

Electric trucks and vans are no different. The 2021 budget for electric truck subsidies is exhausted in 87 regional governments. Those who want to buy an electric bus priced at 200-400 million won now have to wait until next year to receive a subsidy of up to 120-336 million won from regional governments.

Industry experts forecast the depleting EV subsidies will refrain consumers from buying green cars until early March next year. Generally, the central government decides its annual budget for EV subsidies by the end of January, and the regional governments a month later.

EV sales at home reached 313 units in January this year, 2,130 units in February and 8,992 units in March, according to the Ministry of Trade, Industry and Energy.

Sales of new releases including Genesis GV60 and Chevrolet Bolt EUV also will inevitably take a hit for a while.

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