South Korea boosts EV subsidies to spur demand

South Korea's government is increasing consumer subsidies for electric vehicles (EVs) as part of an investment programme aimed at speeding the rollout of zero-emissions cars, pointing to continued demand for cobalt, nickel and other metals used to make their batteries.

Consumers will be able to receive national government subsidies as high as 18.2mn won ($15,613) each to help pay for EV purchases in 2020, according to South Korea's environment ministry. Some local governments offer further incentives. Federal subsidies averaged about W10.9mn per EV in 2018 and have historically topped out at W14mn.

The new system will reward the most efficient cars by basing subsidy levels on driving range, rather than battery size. Incentives also will be sweetened for other types of EVs, including buses. Hydrogen fuel cell electric vehicles (FCEVs) will be eligible for subsidies as high as W42.5mn each.

Purchase incentives are part of a W1.15 trillion package of state spending that is designed to spur growth of the EV and FCEV industries. The budget, which rose by 69pc from last year's W680bn, also includes funding to help build charging stations. Subsidies will be offered this year for as many as 84,150 EVs, up by 54pc from 2019's cap, and for 10,280 FCEVs that is an 87pc increase.

But China is reconsidering plans to phase out its purchase incentives at the end of 2020. With Chinese incentives reduced in 2019, unit sales fell in the country for the first time, stalling the industry's growth and calling into question plans to wean the world's largest EV market off subsidies.

By Tony Cox