South Korea's 'green push' is swiftly shifting fleets to electric
In Asia's buzzing electric vehicle (EV) market, South Korea is displaying a much stronger intensity in green transformation than many other regional countries, thanks to its strong government support and electrification strategy.
South Korea opened a new page in its eco-friendly transformation in 2020 by announcing the "New Green Deal", which foresees 1.13 million EVs and 200,000 hydrogen vehicles on the roads by 2025. By the decade's end, the number of eco-friendly vehicles is expected to reach 4.5 million.
The following year, the South Korean government announced an incentive strategy to lower EV prices, aiming to cut the initial purchasing price by almost half. According to Business Korea, the strategy includes cutting the cost of EVs to around 10 million SK won (€7,300) in the coming four years. This would be possible by developing new platforms, focusing on domestic battery production and offering battery leases upon purchase from 2023.
According to Electrek, subsidies up to 50% are offered to EVs priced between 60 and 90 million SK won (€42,000-64,000), and a full subsidy for below 60 million SK won.
Eventually, the EV market in South Korea is expected to grow by 21.06% between 2022-2027 and reach a market volume of $18.76 bn in 2027, according to Statista. In the same year, the unit sales in the South Korean market are predicted to reach 331,000.
Battery leasing to ramp up fleet electrification
The electrification across South Korea has already spread across the public and commercial markets:
- Seoul plans to electrify all two-wheeled vehicles and old diesel trucks by 2025. The transport sector accounts for 19.2% of the capital's greenhouse gas (GHG) emissions, according to Smart City Korea.
- Raising the charger-to-EV ratio to 50% or above across the country by 2025.
- Deploying at least 123 high-speed chargers to cover an average trip of 325 km between Seoul and Busan and deploying 450 hydrogen stations across the country by 2025.
- Seoul also want to install over 200,000 chargers by 2026, converting 10% of the 4 million registered vehicles in the city into electric the same year.
The battery leasing programme is expected to boost the electrification of taxi and truck fleets starting this year and expand new energy transportation through hydrogen buses in the coming years. The Ministry of Trade, Industry and Energy is working with several industry giants, including Hyundai and LG and taxi company KST Mobility under this plan, according to Electrive.
The biggest impact on the fleet side is the rental car market. Local rental car companies are swiftly getting accustomed to EVs. According to S&P Global, rental companies are expected to grab 8% of green vehicle sales by 2025. While the trend of abandoning fossil-fueled vehicles is growing, S&P Global says long-term lease packages are quite popular in big cities in South Korea, pushing the new energy vehicle trend up.
Important to note that South Korea was at the top of the list of countries having the highest EV per charging point ratio in 2021. According to International Energy Agency (IEA) figures, South Korea had a ratio of 9.5 with 105,000 chargers, while Europe's ratio appeared to be 15.5 and China's 7.2.
Over 80% of the chargers in South Korea are slow. Still, Hyundai plans to add 5,000 fast chargers by 2025 with Lotte Group, one of the biggest car rental companies in the country and the biggest financial group, KB Asset Management.
No surprise that S.Korea grabbed the most innovative country seat in the Bloomberg Innovation Index last year among 60 countries.
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