As China and the United States are strengthening the benefits of subsidies for the purchase of electric vehicles that are favorable to domestic companies, there is a point within and outside the automobile industry that Korea’s electric vehicle subsidy support system needs to be supplemented.
This is because only Korea is paying subsidies regardless of domestic and imported cars while China is strengthening the competitiveness of its electric vehicle industry with the recently enacted ‘Inflation Reduction Act (IRA)’ in China as a ‘recommended list for new energy vehicles’.
According to industry sources on the 6th, Ahn Deok-geun, the head of trade negotiations, decided to visit Washington DC for three days until the 7th to discuss the IRA issue that took effect in the United States and meet with key figures from the US administration and Congress one following another.
The IRA stipulates that only electric vehicles produced in North America should be subsidized. In order to receive subsidies of up to $7,500 per electric vehicle, the vehicle must be manufactured in North America.
Accordingly, immediately Hyundai Motor Group is at a disadvantage in the electric vehicle market. This is because Hyundai Motor Group cannot receive subsidies until 2024-2025 when it completes the electric vehicle plant in Georgia. Currently, the Ioniq 5 and EV6 are all produced in Korea.
Following China, which has already thoroughly protected domestic electric vehicles, the United States is also implementing policies to protect the electric vehicle industry that are favorable to local companies such as General Motors (GM) and Ford.
In fact, China has been subsidizing only electric vehicles using Chinese-made batteries and parts through a system called ‘New Energy Vehicle Recommendation List’. In the case of high-priced electric vehicles, BaaS must be built-in. Currently, in China, only Chinese companies such as Geely and Beijing Motors meet this condition. Even Korean battery makers discriminate once morest batteries manufactured in Chinese factories and do not provide subsidies for electric vehicles equipped with Korean batteries.
The U.S. government has subsidized only 200,000 electric vehicles per year to one manufacturer, but the IRA has abolished this regulation. In the case of GM, Ford, and Tesla, only 200,000 electric vehicles were subsidized a year, but they will be able to receive subsidies for additional sales in the future. In effect, IRA regulations are supporting their own companies.
In the case of Japan, domestic electric vehicles are given preferential treatment by providing additional subsidies to electric vehicles with an ‘external power supply function’. The external power supply function is a function that can use an electric vehicle as an emergency power supply in case of disasters such as earthquakes and tsunamis. It is mainly installed in Japanese electric vehicles.
Considering that German companies have a high proportion of plug-in hybrids, Germany supports a relatively large amount of subsidies for hybrid vehicles compared to other European countries. France and Italy set an upper limit on subsidized prices to limit the sale of high-priced imported electric vehicles, considering that their domestic companies mainly produce small electric vehicles at low prices.
On the other hand, in Korea, there is no discrimination regulation on electric vehicle purchase subsidy for imported and domestic cars. In Korea, subsidies are differentially paid only according to fuel efficiency, mileage, energy efficiency, and price.
For example, 100% of the selling price of less than 55 million won and 50% of the selling price of less than 55 million won to 85 million won is paid equally to both domestic and imported cars. In the first half of this year, US electric vehicle maker Tesla is known to have received regarding 40 billion won in subsidies in Korea alone.
As Chinese companies are actively jumping into the domestic market for ultra-small electric vehicles and buses, there are also criticisms of whether ‘China’s electric vehicle companies are raised with Korean taxes’. In the case of electric buses, subsidies of up to 70 million won this year, and ultra-small electric vehicles, regardless of the type of vehicle, will be supported in a flat amount of 4 million won. In addition, each local government can receive an additional 5 million to 7 million won.
The industry predicts that the subsidy for purchasing electric vehicles from China, including electric buses and micro electric vehicles, will exceed 200 billion won this year.
Ho-jung Lee, a researcher at the Korea Automobile Research Institute (Han Ja-yeon) explained, “It is difficult under international standards to explicitly discriminate once morest a specific country’s products in an electric vehicle subsidy policy, but an invisible barrier can be built through the subsidy payment method that takes into account the characteristics of domestic products.” did.
Reporter Noh Jeong-dong, Hankyung.com dong2@hankyung.com
