South Korea To Consider Removing Subsidy Restriction That Could Result In $18,000 Discount On Tesla Model S & X

8 months ago by Eric Loveday 19

Tesla Model S

Tesla Model S

Over in South Korea there exists an odd rule that makes its difficult for makers of long-range electric vehicles to sell cars there with any degree of success.

BYD e6

BYD e6

You see, South Korea denies subsidies for electric vehicle with high-capacity batteries due to long charging times. As Reuters explains:

“Currently, buyers of EVs that fully charge in under 10 hours using a standard electricity supply receive up to 22 million won ($18,328). The Model S 90D and latest e6 from China’s BYD Co Ltd likely take longer, industry officials say.”

“Minister of Environment Cho Kyeung-kyu in October said the 10-hour rule was introduced in 2012 to reduce the inconvenience of long charging times, but that it was time to review it considering the charging times of current long-range models.”

Of course, we all know that bigger batteries take longer to charge, but this odd rule seems to be holding back the electric car segment, rather than advancing it, as was the original intent.

Eventually, all cars, regardless of battery size, will charge in under ten hours, but for now charge rates, especially at home, don’t always allow for this 10-hour limit to be met.

Both BYD and Tesla Motors stand to benefit if the rule is removed. Vehicles from both automakers would benefit from the subsidy to the tune of reduced pricing by approximately 20%.

Reuters adds:

“BYD, the world’s largest EV maker, also planned to enter Korea earlier this year with its e6 but delayed because its latest model is ineligible for the subsidy, a person familiar with the matter told Reuters.”

“Tesla Vice President Nicolas Villeger last month said the automaker was working with the government to change a “unique rule” that does not reflect advances in battery technology.”

“A month earlier, opposition lawmaker Lee Sang-don called the rule an “unreasonable non-tariff barrier” that deprives consumers of incentives to buy long-range EVs.”

“The rule is meaningless,” Kim Pil-soo, president of the Korean Electric Vehicle Association, told Reuters. “We have kept telling the government they should remove it.”

Long-term, this odd subsidy restriction, if kept in place, will keep other automakers from selling in South Korea too, especially since the trend is towards electric cars with bigger and bigger batteries.

The South Korean government is expected to make a decision on whether or not to remove this restriction from the subsidy program by this June.

Source: Reuters

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19 responses to "South Korea To Consider Removing Subsidy Restriction That Could Result In $18,000 Discount On Tesla Model S & X"

  1. William says:

    That will probably hurt sales a bit for Tesla. Let’s hope The Model 3 doesn’t get the same treatment when it arrives in 2019-2020.

    1. ffbj says:

      That was not quite right, though NHSB finds Tesla autopilot not at fault. Also 40% reduction in accidents, as this report indicates:
      http://finance.yahoo.com/news/tesla-autopilot-vindicated-40-drop-185742561.html

      1. Pushmi-Pullyu says:

        WOW! That’s big news! No doubt an InsideEVs article is coming soon on that.

        Tracing this to its source, I find the following in the NHTSA report:

        ODI analyzed mileage and airbag deployment data supplied by Tesla for all MY 2014 through 2016 Model S and 2016 Model X vehicles equipped with the Autopilot Technology Package, either installed in the vehicle when sold or through an OTA update, to calculate crash rates by miles travelled prior to and after Autopilot installation. Figure 11 shows the rates calculated by ODI for airbag deployment crashes in the subject Tesla vehicles before and after Autosteer installation. The data show that the Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation.

        source: section 5.4 of the NHTSA document linked below:

        https://static.nhtsa.gov/odi/inv/2016/INCLA-PE16007-7876.PDF

        1. Pushmi-Pullyu says:

          ODI = Office of Defects Investigation

        2. ffbj says:

          It should give a request for lower insurance rates arguments ammunition. Hey my Tesla is 40% less likely to get into an accident.

  2. ItsNotAboutTheMoney says:

    By amazing coincidence this change in rule would also increase the subsidy on the LG, sorry, Chevrolet Bolt.

    1. Kdawg says:

      I’m thinking it has more to do with this. Expect a rule change by 2018.

      http://www.greencarreports.com/news/1107304_hyundai-ioniq-electric-car-to-get-200-miles-of-range-soon

      “Hyundai plans to launch a version of the Ioniq Electric with at least 200 miles of range by 2018”

      1. Josh Bryant says:

        Spot On!

        Also, Model 3 has several S Korean suppliers lined up, so maybe damaging Tesla is a great idea either.

  3. Ambulator says:

    The rule is stupid, but so is the size of the subsidy. Unless it is offsetting some crazy high vehicle tax it should be much reduced.

  4. Bob Nan says:

    The whole reason they put this restriction is to prevent Tesla & BYD from selling their vehicles. Its high time, USA also should put some restrictions on foreign countries and their vehicles which carry such restrictions.

  5. Just_Chris says:

    It’s strange Tesla haven’t gotten around this. Just limit the battery size electronically to 30 kWh at point of sale and then offer a $1 upgrade to the maximum capacity. There might have to be a delay between purchasing the car and the upgrade but I am sure people would be willing to wait to receive a discount of $18k.

    1. William says:

      The Tesla $18K South Korean Loop Hole, that you can drive a Premium EV car through.
      Let Elon know that S. Korean sales should see some impressive gains, once the battery software is revised/updated.

    2. zzzzzzzzzz says:

      Advocating $18k taxpayer funded subsidies for luxury goods is disgusting. South Korea population isn’t the richest in the world and can spend money better. You can buy a dozen of electric scooters for that single car subsidy and have money left for bicycle trail infrastructure development, that would make a bit of real difference.

      1. Pushmi-Pullyu says:

        A shill for Big Oil complaining about government subsidies.

        What a staggering level of hypocrisy.

        If American taxpayers didn’t provide trillions of dollars to fund using the U.S. military to protect Big Oil interests overseas, then we would all be driving electric cars already, and there would be no need for subsidies for EVs.

  6. curious lurker says:

    So what is the household non-appliance (not dryer or electric stove) voltage and current there in South Korea?

    1. Chris C says:

      220v, they the same 16a Schuko plugs as much of continental Europe (which is the reason why the law isn’t as bad as if there was a similar law in the US/Canada)

  7. Apkungen says:

    Definitely the stupidest thing I’ve ever heard!!! Haha.

  8. Apkungen says:

    This is definitely the reason why the ioniq electric didn’t get a bigger battery…