South Korea's Minister of Climate, Energy and Environment Kim Sung-hwan said the government is reviewing a plan to apply differentiated tax deductions on corporate vehicle expenses to encourage companies to purchase electric vehicles. Regarding mounting upward pressure on electricity rates due to rising liquefied natural gas (LNG) prices in the wake of the U.S.-Iran war, Kim said, "We will manage the situation by expanding nuclear power and renewable energy so that it does not lead to rate hikes."
Appearing on the YouTube channel "Jang Yoon-sun's Reporter's Convenience Store" on the 28th, Kim said, "When corporations purchase new vehicles, the cost is treated as an expense. We are discussing with the Ministry of Economy and Finance a plan to apply this differentially so that companies preferably purchase EVs." Following the mandate that government and public institutions use EVs when newly purchasing official vehicles, the aim is to also encourage general corporations to buy EVs.
Kim also said the government plans to gradually convert various special-purpose vehicles to EVs. "Police vehicles have been centered on internal combustion engines due to mobility and charging time issues, but we are preparing to convert them to EVs," Kim said. "We are also working to convert the motorcycles and trucks of Korea Post to EVs."
The Ministry of Climate, Energy and Environment is seeking to boost EV demand because converting internal combustion engine vehicles to EVs is essential to achieving decarbonization goals in the transportation sector. The move is interpreted as an effort to accelerate this transition, as EV demand has been rising recently on the back of higher oil prices and greater model diversification by manufacturers.
According to the Ministry of Trade, Industry and Energy, domestic EV sales last month reached 38,927 units, surging 139.7 percent year-on-year. Over the same period, EV export volumes also grew 42.6 percent, from 25,702 units to 30,198 units.
On concerns that electricity rates could rise due to the U.S.-Iran war, Kim drew a line, saying, "There are no signs yet that Korea Electric Power Corp. (KEPCO) will turn to deficit." The annual average system marginal price (SMP) must exceed 146 won per kilowatt-hour (kWh) for KEPCO to swing into deficit, but it is still hovering in the 120-won range. "Of course, if the rise in gas prices is prolonged, we cannot rule out the possibility that KEPCO will post a deficit," Kim said, but pledged, "We will manage it well by minimizing LNG use."
Regarding Sunlight Income Villages, Kim explained, "President Lee Jae-myung instructed us to review a plan to expand it to all of the country's roughly 38,000 ri-level villages," but added, "For now, we plan to push ahead with a pilot project targeting 700 to 1,000 sites this year." Kim went on to say, "In the case of the Guyang-ri Sunlight Income Village in Yeoju, the village generates revenue of around 10 million won per month, which residents use for meals, transportation, and community activities. The Sunlight Income Village can become a new rural basic income model that connects solar energy to residents' income."
