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South Korea seeks to boost motorists’ interest in electric cars

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Date
2017-08-03 14:24
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Seoul’s strategy includes developing infrastructure and providing subsidy


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South Korea’s government and automakers are on a drive to make the electric car a mainstay of life in one of the world’s most technologically advanced countries.

The adoption of eco-friendly vehicles has uncharacteristically lagged behind in the east Asian nation, but authorities, as well as carmakers, are hoping a combination of vast infrastructure development, generous subsidies and advances in battery technology will boost interest among drivers.

Already the strategy is bearing fruit. Electric vehicles sales in South Korea last year doubled year on year to nearly 6,000, and officials expect that figure to more than double again to 14,000 this year. By 2020, the government wants 250,000 electric vehicles on the road.

“That’s where the future lies,” says Manfred Fitzgerald, head of Hyundai Motor’s luxury brand Genesis, at a trade fair in the southern city of Busan last year.

“In crafting and shaping a new brand for the future, alternative propulsion systems will be the focal point.”

The push towards electric, eco-friendly vehicles is being driven primarily by concerns over emissions, particularly following the Volkswagen scandal in 2015.

But there is also a pervasive belief that South Korea should maintain its position and reputation for harnessing cutting-edge technologies.


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Last year, the government announced that eco-friendly vehicles would account for 30 per cent of automobile sales in the next three years — an ambitious target given the current market share is less than 3 per cent.

The goal, however, is being aided by generous subsidies and a programme to improve the country’s infrastructure by building tens of thousands of charging points across the nation.

Hyundai, the world’s fifth largest carmaker, last year launched South Korea’s first mass-produced electric vehicle — the Ioniq — and it plans to build upon its market dominance next year with a model that could travel 320km on a single charge.

The company will be beaten to the long-range segment, however, by the local unit of General Motors, which is next month expected to roll out the Bolt, a low-priced hatchback capable of covering nearly 400km on a single charge.




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Analysts expect the new models, combined with the arrival of Tesla later in the year, to boost demand.

“The introduction of long-range electric models by GM and Tesla and the expanded line-up of electric vehicles will surely appeal to Korean customers, who have been put off by the limited driving range of the models available,” says Kim Kyu-ok, a researcher at the Korea Transport Institute.

“Koreans increasingly prefer to purchase good quality imported cars,” Mr Kim adds.

The rollout of the Bolt will have special resonance in South Korea given the role of LG in its development.

The Seoul-headquartered electronics company provided an “unprecedented” array of components, including infotainment and battery systems, for the vehicle in the latest example of the increasing convergence between global tech groups and automakers.

In November, crosstown rival Samsung exploded into the world of auto-tech with the announcement of a $8bn deal to buy US parts supplier Harman.

“The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade,” Young Sohn, Samsung’s chief strategy officer, said following the announcement.





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According to Kim Kyung-yu, a researcher at the Korea Institute for Industrial Economics and Trade, the lack of vehicle charging points has proven a significant factor in damping demand in the past.

Critics have also complained about the subsidy programme, arguing that it is inconsistent across the country and information is not readily available on what funds are available in each precinct.

The state provides grants worth Won14m ($12,000) for certain electric vehicles, while local governments can offer up to an additional Won12m, the environment ministry said.

For Lee Min-ha, secretary-general at Korea Electric Vehicle Association, much rides on the expected arrival of Tesla later this year.

The US company has plans to open a showroom in Seoul and analysts believe its presence will transform how South Koreans view electric vehicles.

“Compared with Korean electric vehicles, customers seem to be attracted to Tesla’s sleek design and long-range battery,” says Mr Lee. “A Tesla is like a smartphone on wheels.”


Additional reporting by Kang Buseong

Financial Times, 12th February 2017, https://www.ft.com/content/2df59014-f0f5-11e6-8758-6876151821a6

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