South Korea will cut subsidies for electric cars by 2022 and get up to $5900

According to foreign media reports, the price of electric vehicles in South Korea is likely to rise this year as the South Korean government decides to reduce subsidies for electric vehicles from January.

This year, only electric cars with a price of 55 million won ($46000) or less are eligible for full government subsidy, compared with electric cars priced at 60 million won or less last year, South Korea's Ministry of Environment and the auto industry said on Jan. 20.

This means that this year, electric cars priced between 55 million and 60 million won will receive only about half of last year's subsidy. For example, consumers who buy a Genisse GV60 at a starting price of 59.9 million won will only receive a subsidy of 3.5 million won instead of 8 million won.

According to the policy issued by South Korea's Ministry of Environment, the maximum subsidy for South Korean electric passenger cars will be reduced from 8 million won to 7 million won ($5900), and the maximum subsidy for small electric trucks will be reduced from 16 million won to 14 million won. South Korean government sources said, "although the government is soliciting opinions from the auto industry, if there is no problem, this subsidy policy will be implemented before February, and consumers will receive subsidies from March."

Previously, in order to get full subsidy from the South Korean government, car companies set the price of some electric models at less than 60 million won. The lowest price for GV60 and Mercedes-Benz EQA is 59.9 million won. Last year, parts of Tesla's Model 3 and Model Y sold for 59.99 million won. This year, electric cars priced above 85 million won will not be subsidized by the government.

As the price of electric vehicles is generally higher than that of internal combustion engines, subsidies have a decisive impact on the sales of electric vehicles. In December, sales of electric vehicles in South Korea generally fell as the subsidy budget was exhausted, so the new subsidy policy is likely to lead to a drop in demand for electric vehicles.

Cheaper electric passenger cars are expected to benefit from this year's new subsidies. This year, New Polestar 2 electric cars sold at a starting price of 54.9 million won will receive full subsidies., New Mini Electric, Korando e-Motion, New Bolt EV and other fully subsidized models will be welcomed by consumers.

This year, the number of subsidized electric cars in South Korea is expected to triple to 207500, including 164500 passenger cars and 41000 minivans. These vehicles can enjoy a state subsidy of up to 7 million won. Although the number of electric cars that can enjoy subsidies from the South Korean government has increased, the amount of subsidies has decreased from 8 million won to 7 million won.