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| An illustration of K9, an electric bus made by Chinese electric vehicle manufacturer BYD / Korea Times file |
By Lee Kyung-min
The government should revise the current state subsidy scheme for electric vehicles (EVs) to provide larger benefits to made-in-Korea vehicles as China and other countries do for their own cars, experts said Tuesday.
Underpinning the protectionist-leaning recommendation is the much-contested Inflation Reduction Act (IRA), the U.S. stimulus package whereby Korean EVs and batteries will have their tax credits denied or significantly curtailed.
They say Korea is practically the only EV manufacturing powerhouse that fails to protect local players, as illustrated by the price- and fuel efficiency-based grant scheme.
The indiscriminate spending of taxpayers' money on bolstering the sales of foreign-made EVs needs prompt revisiting, they argue, after a thorough review of similar policies in European countries, as well as China and Japan. The global rivals of Korea grants greater subsidies to certain locally produced models with competitive edge, a growth strategy that circumvents disputes from global trade agreement violations.
Foreign-made EVs thriving
"Foreign-made EVs are thriving at the expense of local players," an official of the Korea Automobile Manufacturers Association said. "The current scheme is designed primarily to strengthen infrastructure and accessibility for EV drivers, with little to no consideration for the nurturing of the local EV and EV battery makers."
The frustration is borne out by the association's data showing the sales of China-made EVs including cargo trucks and buses rose to 1,351 in the first half, an eight-fold increase from a year earlier.
China's share in the Korean EV market subsequently jumped to 6.8 percent in the same period, up from 1.1 percent.
In the EV bus market, China's share spiked to 48.7 percent of the total in the first half of this year, a rapid growth over the past few years led by their larger batteries that guarantee longer driving distance.
Korea spent 79 billion won ($5.7 million) in the first six months of this year to grant subsidies to buyers of Chinese EV buses, almost as great as 112 billion won granted for those buying locally made ones.
Lee Ho-joong, principal researcher Korea Automotive Technology Institute (KATECH), said policy priorities should be about fostering robust, long-term growth of the industry.
"Industrial policies need to help car and battery makers overcome technological shortcomings, an effort as equally important as fortifying competitiveness against global players."
Increasing sales of locally manufactured EVs in the country is secondary to driving innovation to advance the high-tech industry, in his view.
"The environment ministry plans to announce specifics of the revised grant scheme in the latter half of this year. Whether the new measures would draw support or criticism remains to be seen," he said.
