▲ An electric vehicle charging station at a building in Seoul (File Photo)
The government is overhauling the entire electric vehicle (EV) purchase subsidy system.
This comes as rising EV sales have increased the financial burden on local governments, which are required to provide subsidies alongside the national government.
The Ministry of Climate and Environment plans to commission a research study soon to review the overall EV subsidy system and host sessions to gather expert opinions.
The ministry plans to examine whether the rule requiring local governments to provide subsidies equal to "at least 30 percent of the national subsidy" remains appropriate.
EV purchase subsidies are divided into national funds and local funds.
The operational guidelines for the EV distribution project stipulate that local governments must allocate budgets so that local subsidies are paid in an amount equal to at least 30 percent of the national subsidies.
This year, as oil prices surged due to the war between the U.S. and Iran, EVs became so popular that subsidies ran out in some local regions.
According to the Korea Automobile Mobility Association (KAMA), 198,509 new EVs were registered in the first half of this year, a 113.6 percent increase compared to the first half of last year.
EVs accounted for 23.3 percent of all newly registered vehicles (850,636) in the first half.
As the EV market emerges from the "chasm" (temporary demand stagnation) and EVs gain popularity, the ministry is reportedly planning to increase the volume of subsidized vehicles next year.
The issue is that increasing the volume of subsidized vehicles increases the financial burden not only on the central government but also on local governments.
Gyeonggi Province, which records the highest number of new vehicle registrations nationwide, recently declared a fiscal crisis, adding to these concerns.
The ministry is also reviewing whether current subsidy unit prices are appropriate for each type of EV.
In particular, it is working to calculate appropriate subsidy unit prices in line with large electric trucks preparing for release after receiving ministry certification.
An official from the ministry explained, "Considering production costs and other factors, we will examine how much of a subsidy should be provided [for large electric trucks] so they can secure competitiveness against internal combustion engine vehicles and establish a market."
(File Photo: Yonhap News)
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