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THE INVESTOR
February 06, 2023

Market Now

Ministry mulls subsidy cut for hybrids

  • PUBLISHED :February 27, 2022 - 16:23
  • UPDATED :February 27, 2022 - 16:23
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Finance Minister Hong Nam-ki (left) speaks during a ministerial meeting for the nation’s innovative growth in Seoul, Thursday. (Yonhap)

SEJONG -- Hybrid cars will likely be excluded from a government list of eco-friendly cars in the coming years, rendering hybrid-car owners no longer able to enjoy tax benefits or state-led purchase subsidies.

During a ministerial meeting for the nation’s innovative growth in Seoul on Thursday, deputy prime minister and Finance Minister Hong Nam-ki unveiled a policy to regard only electric cars and hydrogen-fueled cars as low-emission cars on a midterm policy direction.

He said that the government “is pushing for policies to exclude hybrid cars from the list of low-emission cars, starting from 2025 or 2026.”

He added, before that, vehicles powered by liquefied petroleum gas or compressed natural gas will be excluded from the list by 2024.

“(But the government) will continue to support auto parts suppliers for hybrid cars in consideration of the cars’ efficiency in reducing greenhouse gas and price competitiveness,” he said.

Currently, owners of hybrid cars enjoy individual consumption tax cuts of up to 1 million won ($830). The corresponding tax benefit for owners of electric cars and hydrogen-fueled cars reach up to 3 million won and up to 4 million won, respectively.

The move comes amid sharply rising market shares of hybrid, LPG- and CNG-powered cars.

Hybrid cars, which were commercialized in the early 2000s in the local market, have gained great popularity among passenger car drivers over the past two decades. The engines are powered by both electricity and gasoline.

Nonetheless, the government is considering extending the individual consumption tax benefit for hybrid-car owners -- whose due is the end of 2022 -- to the end of 2024 or the end of 2025, said the minister.

Hong said the government would also actively push to increase infrastructure for self-driving automobiles on highways across the country, ahead of commercialization.

At the meeting, participants also agreed to raise competitiveness in the nation’s semiconductor industry.

Hong said the government “plans to concentrate on (inducing investment in) research and development in prospective semiconductor items, fostering core manpower, and improving manufacturing lines.”

In addition, participants discussed ways of fostering the digital-based health care industry. The government plans to lend support to businesses that are focused on developing digital-based medical or health care devices.

By Kim Yon-se (kys@heraldcorp.com)

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