The nation’s ambitious goal to become one of the world’s top four electric-vehicle production powerhouses faces a bumpy road due to slower-than-expected market penetration.
Under the 2020 vision for green cars, unveiled in 2010, the government plans to replace 20 percent of cars on the road with EVs for Korea to take 10 percent of the global EV market. For this goal, the Ministry of Environment and the Ministry of Knowledge Economy have invested in infrastructure for EVs to boost demand for the vehicles.
Despite these efforts for the past two years, the Ministry of Strategy and Finance, which controls the nation’s budget, recently cut the Ministry of Environment’s 2013 budget for EVs by more than 50 percent to 27.9 billion won ($26 million).
“It was necessary to cut the EV-related budget next year due to slower-than-expected demand for EVs this year,” a ministry official said.
Even public organizations, which have led the creation of demand for EVs with support of the central government for the past year, have themselves been slow to adopt EVs. As of September this year, Seoul City uses 53 EVs, only 13.8 percent of this year’s target of 385 units.
Industry watchers said the budget cut will have an impact on increasing the number of EV battery stations, a key part of the infrastructure for EVs.
The still-high price of EVs is another factor that causes customers to shy away from the technology. To overcome this issue, the Ministry of Knowledge Economy launched a research and development project in July this year to develop an EV at an affordable price based on home-grown technology.
After three months, the ministry unveiled the design of a compact, high-speed and affordable EV under development on Monday. The two-door, two-passenger, eco-friendly car will be commercialized as early as late 2014 or early 2015.
“The open platform-based EV is expected to lower the car price to around 10 million won ($9,000),” a ministry official said. However, the price estimate excluded the price of the car battery, which is also still expensive for EV commercialization.
“European countries like Germany and France, and China are in competition to take the lead in the green car market. The local government has to seek a consistent EV-related policy, regardless of the short-term market demand,” professor Kim Pil-soo from Daelim University said.
By Seo Jee-yeon (email@example.com)