The Korean government has cut its target supply of hydrogen cars by half. It’s been nine months since the government announced its initial target quantity. It will be difficult to avoid a criticism that the target was set only for show and there was no elaborate planning of distribution nor budgeting.
An analysis of the two reports of “Policy Direction for Distribution of Electric and Hydrogen Cars” and “Comprehensive Solution in Fine Dust Control” shows that the target number of hydrogen cars to be distributed by 2020 dropped by half from 10,000 to 5,000. The reports were co-published by relevant government departments on June 8 this year and on September 26 last year, respectively. This means that the government has lowered its goal on its own accord in nine months.
The Korean government had a plan to distribute 240 hydrogen cars (the subsidy worth 22.5 million won or US$20,200 per vehicle) at the beginning of this year with the added subsidy carried over from last year’s budget. However, when Hyundai Motor began presales of its hydrogen fuel-cell car Nexo with driving distance of 500km per full-battery charge on March 19, more than 1,000 were sold in less than a week. The government hurriedly arranged its supplementary subsidy budget of 11.2 billion won (US$10 million) for hydrogen and electric cars in May to meet the public’s explosive interest and demand which it had not foreseen. The budget was targeted for 500 vehicles. If Hyundai Motor supplies the hydrogen fuel-cell cars in time this year, its target distribution quantity of 700 vehicles should be met without difficulty.
However, the issue is whether 4,200 vehicles can be introduced to the public over the next two years. The government’s subsidy budget is unreasonably low. It’s also uncertain if the supplementary budget can be revised every two years.
If the number of hydrogen fuel-cell cars increases, more charging stations will be needed. The government announced it will build 130 hydrogen charging stations throughout the country by 2020. Experts say that it costs anywhere from 3 billion won to 4 billion won (US$2.7 million to US$3.6) to build one station. The current plan is that the government will subsidize half the cost of building charging stations. However, 120 more stations need to be built in addition to the 12 stations under construction at the moment. To subsidize them, the budget of a minimum 180 billion won (US$162 million) to a maximum 240 billion won (US$216 million) is needed. This adds up to a maximum budget of 340 billion won (US$306 million) just to subsidize the vehicle purchases and charging station constructions.
Another problem is that Nexo from Hyundai Motor is the only hydrogen car available in the market as of now. In Japan, both Toyota and Honda have developed hydrogen cars, the Mirai and Clarity, but neither have any plan to introduce its hydrogen car into the Korean market. One distributor of the Japanese cars said, “Due to issues related to charging stations, it is too early to launch the cars in the Korean market.”