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Environment Ministry Sets Quota for Low-Emission Vehicles at 15% of Annual Sales
Automakers Under Pressure to Develop Eco-friendly Cars
Environment Ministry Sets Quota for Low-Emission Vehicles at 15% of Annual Sales
  • By Choi Moon-hee
  • April 8, 2020, 11:10
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The Ministry of Environment has set this year’s quota for low-emission vehicles at 15 percent of annual sales. The ministry will analyze sales figures of automakers by dividing vehicles into three groups -- electric and hydrogen vehicles, hybrid vehicles, and LPG- and gasoline-powered vehicles –- with different weights assigned to each vehicle type.

The proportion of low-emission vehicles that automakers are required to sell will rise to more than 15 percent beginning next year as the ministry set the minimum quota this year. In particular, in accordance with the General Plan for Fine Dust Management issued by the Ministry of Environment, LNG- and gasoline-powered cars will be excluded from the list of low-emission cars three years later. This means that domestic automakers, which are now focused on vehicles with internal combustion engines, face a need to step up efforts to develop electric and hydrogen vehicles. Considering that it usually takes two to three years to develop a new model, domestic automakers will have to launch project to develop electric and hydrogen vehicles promptly.

The problem is Korean carmakers’ financial conditions. Korean automakers’ performance has been rapidly deteriorating with the rapid spread of the COVID-19 virus. According to a report released by the Ministry of Trade, Industry and Energy, automobile production, domestic demand and exports in February fell by 26.4 percent, 18.8 percent and 25.0 percent, respectively, compared to the same period in 2019.

"If even Korean carmakers roll out electric cars, we are skeptical about their sales," an industry insider said. “If market reactions are lukewarm, Korean carmakers will feel a bigger burden.”

To make matters worse, companies that do not meet the low-pollution vehicle supply target are likely to be held accountable beginning 2022. They are likely to be forced to pay a certain amount of “contribution” for each unit of the unfulfilled quota.