South Korea Penalizes Automakers Missing Eco-Friendly Vehicle Targets – electric and hydrogen cars
Automakers face fines for missing targets; industry deems 50% eco-friendly sales by 2030 unrealistic
Starting this year, automakers and importers that fail to meet government targets for the distribution of eco-friendly vehicles, such as electric and hydrogen cars, must pay a contribution of 1,500,000 Korean won per vehicle short of the goal. This effectively imposes a penalty-like cost on companies that do not fulfill the mandated sales ratio.
On the 5th, the Ministry of Climate, Energy and Environment is set to finalize and announce a revised notice detailing annual targets for the distribution of low- and zero-emission vehicles. Last year, the government pledged to transition half of all new vehicle sales to eco-friendly models by 2030, and this announcement formalizes the phased targets following administrative reviews.
According to the draft notice, the eco-friendly vehicle distribution ratio will rise from 28% this year to 50% by 2030. This requirement applies to manufacturers and importers selling above a certain volume of new vehicles. Those falling short must pay contributions based on the number of vehicles below the target. The per-vehicle contribution is 1,500,000 Korean won this year but will increase to 3,000,000 Korean won starting in 2028.
The automotive industry has criticized the government’s targets as unrealistic. Last year, electric and hydrogen vehicles accounted for only 13.5% of domestic new car sales, and industry players argue that reaching 50% in five years is impossible. Automakers anticipate significant contribution burdens starting this year. For Hyundai Motor and Kia, the country’s largest automakers, annualized sales data from last year (January–November) suggests they would need to pay approximately 130 billion Korean won in contributions this year.
A source from the industry stated,
While companies can offset some targets by increasing renewable energy use until 2027, the government’s requirements are so high that avoiding contribution payments will be impossible.
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South Korea Penalizes Automakers Missing Eco-Friendly Vehicle Targets – electric and hydrogen cars, source
