Tesla Model S and Model X to Be Excluded from Subsidies

The Tesla Model S

The Korean government has decided not to provide subsidies for electric vehicles (EVs) costing over 90 million won a unit. As a result, expensive EVs such as the Tesla Model S and the Model X priced at 100 million won per unit will be excluded from EV subsidies.

The Ministry of Environment has recently set aside a total of 1.005 trillion won as the EV subsidy budget for 2021. The subsidies will vary depending on the vehicle price. Vehicles with prices of below 60 million won are eligible for the full amount of subsidies, but vehicles priced at between 60 million won and 90 million won will receive only 50 percent of the full amount. If the price of a vehicle exceeds 90 million won, no subsidy will be given. The Ministry of Environment will implement the plan after collecting opinions about it by Jan. 19.

Among EV models currently on the Korean market, those exceeding 90 million won include the Porsche Taycan (145.6 million won), the Tesla Model X (115.99 million won), the Audi e-Tron (114.92 million won), the Jaguar I Face (110.4 million won), the Tesla Model S (103.3 million won), and the Benz EQC (95.5 million won). The Tesla Model S received 7.36 million won (standard), the Audi e-Tron 6.28 million won and the Mercedes EQC 6.3 million won in 2020, but they will not be able to receive support in the future.

The Tesla Model 3 ranks first in sales among imported EVs in Korea. But the model is in an ambiguous price range in terms of subsidy qualifications. The selling price of the standard edition is 53.69 million won. But if the model is loaded with a full self-driving (FSD) system, its price jumps over 60 million won. The price of the FSD system has steadily risen to 9 million won. The Model 3 Long Range starts at 63.69 million won. In 2020, the Tesla Model 3 Standard was eligible for a subsidy of 7.93 million won and the Long Range for a subsidy of eight million won.

Car market experts forecast that Korean-made EVs will not be much affected by this change. Hyundai Motor's Kona Electric and Kia Motors’ Niro EV are all priced at less than 50 million won. If the revised subsidy plan is finalized, it is expected to affect the price of the Ioniq 5, which Hyundai Motor is scheduled to launch in the first half of 2021. As the cost of purchasing the Model 3 of Tesla, a rival of the Ioniq 5, has increased, the price gap will widen if the retail price of the Ioniq 5 is set at below 60 million won. In 2020, buyers of the Ioniq, the Kona and the Niro all received 8.2 million won in subsidies.

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