South Korea's government plans to boost investment in promoting environmentally friendly cars and trucks by 57pc next year, including expanded subsidies for electric vehicles (EVs), to help ease an air pollution crisis and spur innovation investment in key export industries.
The environment ministry said its proposed 2020 budget includes 1.1 trillion won ($909.2mn) for clean vehicle programmes, up from this year's target of W700bn. Incentives for consumers to buy EVs, which currently average nearly W10.9mn/unit, will be offered for 65,000 cars in 2020, up by 55pc from this year's allotment of 42,000.
The EV subsidy programme increased at a similar rate this year, helping to underpin firm growth in demand for batteries and the cobalt, lithium and other materials used to make them. Export-reliant South Korea is trying to nurture the country's EV, battery and components producers to help make them world leaders in some of its hottest growth industries. EV battery producers LG Chem, Samsung SDI and SK Innovation are expanding their production capacity in northeast Asia, Europe and the US to capitalise on surging demand for their power packs.
The environment ministry's EV investments next year also will include increased spending on charging infrastructure and incentives for electric delivery trucks. Incentives for hydrogen cars will nearly triple to 11,000 units, while subsidies for hydrogen buses will rise fivefold to 180 units.
The subsidy rate for retiring old diesel-fuelled vehicles will be increased to 60pc of value from 50pc, while the number of retirements targeted will double to 300,000 units. The government aims by 2022 to scrap 77pc of the 2.86mn diesel vehicles on South Korean roads that were built prior to 2006.
