Planned hike in EV charging costs to weigh on carmakers, battery firms
Electric vehicles are parked at a charging station in a Seoul parking garage in this June 2022 file photo. Yonhap
Concerns are growing over the possible rise in costs to charge electric vehicles (EVs), as carmakers and battery firms have already experienced a slowdown in the global demand for eco-friendly vehicles, according to industry officials, Monday.
Since the Korea Electric Power Corp. (KEPCO) invited tenders last month for a six-month project to study what might be considered reasonable EV charging costs, its move is being understood as a preparatory step to make more money from its EV charging stations nationwide.
Although KEPCO denied the speculation after facing a severe backlash, market observers still anticipate another hike in EV charging costs in the near future, given that the debt-ridden electric utility firm has frozen EV charging prices since July 2022 in line with the Yoon Suk Yeol administration’s pledge to alleviate the burden on EV owners.
In its invitation to tender, the government-owned firm also said that the new project is intended to satisfy the public interest and enhance its own profitability, citing the changing market environment and the recent electricity rate hike.
KEPCO’s accumulated deficit reached 45 trillion won ($34 billion) last year with a debt ratio of 550 percent, so it urgently needs to find ways to boost profits. However, the company appears to face a dilemma over raising EV charging costs, considering the protest from EV owners and the potential negative impacts on the car and battery industries.
“Due to the lack of charging stations and rising charging costs, I dropped a plan to switch to an EV,” said an owner of an internal combustion engine vehicle.
Korea Automotive Technology Institute (KATECH) researcher Lee Ho advised carmakers to lower their EV prices, if they want to minimize the negative impacts of a possible charging price hike on their sales.
The global trend of reducing or abolishing subsidies for EVs, however, has made it more difficult for EV makers to maintain their revenues. Korea’s budget for EV subsidies this year fell once again from a year earlier to 1.7 trillion won from 1.9 trillion won. China and several European countries even decided to stop subsidizing EVs altogether.
“The government policies significantly affect the market for eco-friendly vehicles,” the KATECH researcher said. “Considering political events this year, uncertainties will remain regarding the industry.”
Securities firms expect the trend will hurt the battery industry as well.
“As a result of the slow demand for EVs, shipments of rechargeable batteries and their prices have declined,” said Daol Investment & Securities analyst Jeon Hye-young, who lowered the stock price targets for LG Energy Solution and Samsung SDI. “Until the end of the first half, it will be difficult for them to improve their earnings significantly.”
IBK Securities also lowered Samsung SDI’s stock price target to 700,000 won from 800,000 won.