Incentives Designed to Jump-Start Korean EV Market

Incentives for 3,090 EVs are available this year. When added to the 3,014 EVs registered nationwide at the end of 2014, plus the 10,000 proposed new incentives, the government calculates more than 16,000 EVs will be on Korean roads by the end of 2016.

Vince Courtenay, Correspondent

April 29, 2015

4 Min Read
Kia sells 414 copies of Soul EV to lead Korean market in 2014
Kia sells 414 copies of Soul EV to lead Korean market in 2014.

Korean automakers will be butting heads to try to win a slice of the 2016 electric-vehicle market to be sweetened by government plans to subsidize the purchases of 10,000 plug-ins.

The Ministry of the Environment announced April 14 it had asked the Ministry of Strategy and Finance to provide 150 billion won ($137 million) to fund incentives of 15 million won ($13,700) for 10,000 plug-in EVs next year.

That would be a dramatic escalation of a market where plug-in sales for all of 2014 totaled 1,183 units.

Incentive funding is being provided for 3,090 EVs this year. When added to the 3,014 EVs registered in all of South Korea at the end of 2014, plus the proposed new incentive package, the Environment Ministry calculates more than 16,000 EVs will be on Korean roads by the end of 2016.

This year’s 3,090 incentives are being made available in round-robin fashion among 10 major cities in South Korea, including Seoul and the special-status resort island of Jeju off the southern coast, which has declared itself an emissions-free zone.

The federal government also will provide up to 6 million won ($5,500) for consumers who wish to install a standard battery-charging station. Automakers and industry analysts say the lack of fast-charge stations has been a severe deterrent to EV sales.

There are only slightly more than 1,500 charging stations in the entire country. Hyundai has noted this is one of the reasons it only belatedly has considered bringing out its own EV.

The Seoul government says it is adding 100 charging stations this year to help remedy this, bringing the total in the region to 147. By 2018, officials plan to add an additional 500 stations.

Analysts note that in addition to a dearth of charging stations, road-use regulations also limit potential EV sales. It is illegal for battery-powered EVs to operate on some of Korea’s major high-speed highways, thus limiting their use to city streets.

The incentives are meant to help overcome these obstacles by expanding the EV market.

Hyundai Latecomer to EV Game

Hyundai is planning to enter the fray by marketing its own plug-in vehicle next year, a spokesman tells WardsAuto without providing details.

Entering the EV arena would be a dramatic change in policy for Korea’s biggest automaker, which a few years ago stood aside from battery-powered vehicles in favor of hybrids and fuel-cell propulsion systems, leaving the field to its sister automaker Kia.

However, Hyundai since then has entered the plug-in hybrid electric vehicle field with the Sonata PHEV, launched this year in both Korea and the U.S., joining Kia, which has released its K5 (Optima) PHEV.

Kia tells WardsAuto it has discounted the retail price of the Soul EV by 1 million won ($914). This drops the price to 41,500 won ($38,000) before incentive subsidies.

The Ministry of the Environment and Seoul rebates would cut the price to 25 million won ($23,000) and regional incentives could lower the price even further by as much as the 9 million won ($8,200) available on Jeju Island, yielding a price of just 16 million won ($14,600).

In 2014 the Soul EV was the nation’s plug-in electric leader, selling 414 units. Kia does not provide future sales targets for the vehicle.

Renault Samsung Motors has dropped the price of its SM3 EZ, the second most-popular EV in Korea last year with 309 deliveries. The 1.48 million won ($1,400) discount lowers the SM3 EZ’s price before incentives to 41.9 million won ($38,000). In Seoul, with the central government and local incentives applied, it would sell for 25.4 million won ($23,200).

Unlike competitors, RSM has stated a sales target for 2015 and aims to sell 1,000 units of the SM3 EV, or nearly one-third of the 3,090 available federal rebate subsidies.

RSM’s sales strategy focuses on the Korean taxi market, especially the taxi market in regional Seoul where about 75,000 taxis are used daily by more than 1 million passengers. Roughly 300,000 taxis operate nationwide.

Discounts and incentives lower the price of GM Korea’s Spark EV by more than half.

“The normal price of a Spark EV is 39.9 million won, which is equivalent to $36,400 before any incentive,” a spokesman says. The incentives drop the price by 16.5 million won ($15,000) and GM Korea kicks in a special discount of 1.5 million won ($1,370), yielding a retail price of 18 million won ($16,400).

BMW offers special incentive payment schedules for its newly available BMW i3. Designed from the ground up as a battery-electric vehicle, the i3 was introduced in Korea, the U.S., China and more than 30 world markets in 2014.

Other BMW i3 incentives include such things as free hotel vouchers and an opportunity to borrow for two days its just-launched high-end PHEV, the luxurious BMW i8 grand touring sports coupe.

Analysts note that announcement of a future subsidy program for PHEVs would inhibit sales of the new entries because customers would put off purchases awaiting confirmation of possible incentives.

The automakers think PHEVs eventually will make it under their own steam, but for now need government support before they can turn the corner.


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