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Why Are Korean Consumers Shunning PHEVs Very Popular among US Consumers
Reasons for Unpopularity
Why Are Korean Consumers Shunning PHEVs Very Popular among US Consumers
  • By Jung Min-hee
  • June 7, 2017, 03:45
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Ioniq Plug-In, a model of Hyundai Motor’s plug-in hybrid electric vehicles (PHEVs).
Ioniq Plug-In, a model of Hyundai Motor’s plug-in hybrid electric vehicles (PHEVs).

 

Plug-in hybrid electric vehicles (PHEVs), which are booming in the US, are failing to gain in as much popularity as in the US due to low subsidies and a lack of consumer awareness in Korea.

According to the automobile industry on June 6, PHEVs sold by Korean automakers in May totaled just 40. Hyundai Motor’s Ioniq and Sonata sold 18 and nine units, respectively, followed by GM Korea’s Bolt (7), Kia’s K5 (4) and Niro (2). However, it is said that deliveries of the Niro are being delayed due to problems such as production schedules, although over 100 units of the Niro were preordered.

The same goes for import PHEVs. The Prius Prime launched by Toyota Korea sold 17 units in April. Except for eight cars that are used at exhibition halls, there were actually nine vehicles delivered to actual consumers.

PHEVs are shunned by consumers in the Korean market because they are expensive and subsidies are not enough. The government subsidy for a PHEV is 5 million won (US$4,500), which is one fourth of the subsidiary for electric cars which amounts to 20 million won (US$18,000). The gap is further widened, adding subsidies by local governments. PHEVs are much more expensive than conventional internal combustion engine-powered vehicles. Plug-in K5 hybrids are US$17 million more expensive than K5 gasoline-powered models. Even if subsidies are added, the gap will hit more than 10 million won (US$9,000).

The expansion of the PHEV market in Korea is being impeded by consumers' lack of awareness and inconvenient charging methods that are not better than charging methods for electric cars. "It is as plain as a pikestaff that PHEVs serve as a stepping-stone to ultimate eco-friendly cars like electric cars," said Lee Hang-goo, a senior research fellow at the Korea Institute for Industrial Economics and Trade. “A lack of subsidies and publicity still makes PHEVs a stranger to Korean consumers.”

Unlike South Korea, PHEVs are rising as a new star among eco-friendly cars in the United States. In the United States, the Chevrolet Bolt sold 7,370 units, ranking first in the electric car sector (including plug-in hybrids) according to Inside EV. The Prius Prime also sold 6,165 units, climbing to third place this year.

The United States sets tax breaks for electric cars and PHEVs on the same criterion -- battery capacities. If a battery capacity exceeds 5 kWh, the buyer will enjoy a tax break of US$2,500 and additional US$417 for every 1 kWh increase. A Bolt buyer can receive up to US$7,500 based on the criterion.