The government is considering a plan to use budget funds for supporting the rollout of hydrogen cars and hydrogen charging stations as a source for electric vehicle subsidies, according to reports on the 17th. With this year's electric vehicle subsidies budget expected to run out around Aug., the aim is to secure funding so subsidy payments do not stop.
According to ChosunBiz reporting, this year's electric vehicle subsidies budget is 1.7454 trillion won, of which about 600 billion won is said to remain. Even after adding 150 billion won through the first supplementary budget on Apr., two-thirds has already been executed.
This is seen as the result of rapidly rising demand for electric vehicles amid high oil prices caused by the Middle East crisis. According to the Ministry of Trade, Industry and Resources, domestic sales of electric vehicles from January to May this year reached 162,026 units, up 125.3% from a year earlier. That far outpaces the overall automobile sales growth rate (1.0%). Electric vehicles accounted for 23.6% of all new car sales, meaning one out of every five new cars was an electric vehicle.
The last time the annual electric vehicle subsidies budget was fully executed was 2021. After that, as the electric vehicle "chasm" (demand slowdown) emerged, funds began to remain, and last year about 180 billion won was cut during the supplementary budget process.
The government plans to secure more funding to prevent a drop in electric vehicle demand due to not receiving subsidies. Minister Kim Seong-hwan of the climate ministry said at a press briefing on the first anniversary of its launch on the 4th, "From a people-centered perspective, regardless of how much budget is allocated, it is right to allow consumers to buy as many vehicles as they want."
Budgets being reviewed for reallocation include subsidies for the rollout of hydrogen cars (this year's budget: 576.2 billion won), support for the rollout of electric chargers (451.75 billion won), and support for the rollout of hydrogen charging stations (174.3 billion won). Unlike for electric vehicles, these programs are said to have budget leeway.
However, the issue of matching local funds remains. Electric vehicle subsidies are structured to match central and local government funds, so local government budgets must follow the central government budget. An official at the climate ministry said, "We are seeking cooperation to make up for the shortfall in local funds through a supplementary budget next month, when new local government heads begin their terms."