Sejong, April 5 - The Ministry of Environment (Minister Han Wha-jin) announced the ‘2023 revised subsidy scheme for the purchase of two-wheeled vehicles (hereinafter referred to as the "revised subsidy scheme") on March 28, 2023. The Ministry has commissioned research projects since the second half of 2022 to revise the subsidy scheme and held a meeting to collect stakeholders' opinions, such as two-wheeled vehicle manufacturers, importers, and battery manufacturers.

As the demand for two-wheeled vehicles has recently increased along with the surge in delivery demand, the government's policy efforts to prevent an increase of internal combustion two-wheeled vehicles and boost the use of electric two-wheeled vehicles are now more important than ever. Until recently, the Ministry of Environment has achieved the distribution of 62,917 electric two-wheeled vehicles. The Ministry allocated a budget of KRW 32 billion for subsidies with a goal to distribute 40,000 electric two-wheeled vehicles. The Ministry considers the short driving distance and long charging hours (around 3 hours) of electric two-wheeled vehicles compared to the internal combustion ones to be the main factors that suppress the demand for electric two-wheeled vehicles. Therefore, the Ministry plans to provide subsidies mainly to boost the use of electric two-wheeled vehicles with removable batteries, which have a longer driving distance per charge and a shorter charging time.

The details of the revised subsidy scheme are as follows.

① The Ministry of Environment will develop a subsidy scheme tailored for electric two-wheeled vehicles with removable batteries.

In the case of electric two-wheeled vehicles with removable batteries, there is no need to take the time to charge a battery because a flat battery can be replaced with a fully-charged one at a battery replacement station. It is also possible to purchase only the vehicle body without the battery and use battery-sharing services to operate an electric two-wheeled vehicle. Despite such convenience, subsidies have been provided only for the purchase of an entire electric two-wheeled vehicle, which includes the battery (body + battery). It was a limitation for increasing the purchase rate of electric two-wheeled vehicles with removable batteries. Now, the Ministry will provide 60% of the total subsidy for purchasing a vehicle body only (using battery-sharing services) so that users can purchase electric two-wheeled vehicles at lower prices than before. It is expected to boost the use of electric two-wheeled vehicles with removable batteries and considerably improve user convenience by increasing the number of battery replacement stations and improving the system for battery performance/safety management.

② The Ministry of Environment will set up differential criteria for subsidization based on the vehicle size and performance of two-wheeled vehicles.

It has been pointed out that excessive subsidies are provided for other types of electric two-wheeled vehicles (including three-wheeled vehicles, etc.) because the maximum subsidies for general and large electric two-wheeled vehicles are available regardless of their performance or size. Therefore, the Ministry of Environment will establish and implement separate criteria for subsidization for other types of electric two-wheeled vehicles starting in 2023. The Ministry will provide a maximum subsidy of KRW 2.7 million to other kinds of electric two-wheeled vehicles in 2023. Moreover, the Ministry is reviewing a differential maximum subsidy scheme for other types of electric two-wheeled vehicles based on the vehicle size and type. In addition, the rate of battery capacity reflected when calculating a subsidy will be increased (40%→45%) to boost the use of electric two-wheeled vehicles with a long driving distance per charge. When reflecting hill-climbing ability, which is highly variable according to the vehicle weight in subsidies, curb weight will also be considered to prevent safety and marketability from being undermined due to excessive weight reduction.

③ The Ministry of Environment will provide better support for small business owners and socially vulnerable groups on purchasing electric two-wheeled vehicles. 

Due to the characteristics of two-wheeled vehicles, most purchasers are small business owners who use the vehicles for their livelihood, such as making deliveries, or socially vulnerable groups who want to purchase a means of transport at a lower cost. Therefore, an additional 10% of the calculated subsidy will be provided for small business owners and socially vulnerable groups to lower the purchase barrier. Before, purchasing an electric two-wheeled vehicle used for delivery was recognized for additional support only when a paid transport insurance of at least six months was taken out. But there will be a relaxation of this provision that complimentary transport insurance of at least three months will suffice. It will reduce the burden of insurance costs for most two-wheeled vehicle purchasers, including delivery workers.

④ The Ministry of Environment will prevent subsidy fraud by enhancing data management of electric two-wheeled vehicle operations.

A computerized management system will be established to meticulously manage information on owners of electric two-wheeled vehicles (subsidy recipients) and data about when 'operation' and 'termination of operation' were reported. This system will be used to thoroughly prevent the possibility of subsidy fraud (identity theft to fake a vehicle purchase, etc.), and to retrieve all subsidies from those who did not comply with a mandatory vehicle operation period following the legal standards.

The Ministry of Environment posted the ‘2023 Electric Two-Wheeled Vehicle Subsidy Guidance', which contains the revised subsidy scheme, on the zero-emission vehicle website (www.ev.or.kr) on March 28, 2023. The Ministry will finalize the guidance after collecting evidential s needed to calculate subsidies and opinions by April 3, 2023.

Park Yeon-jae, Director-General of the Air Quality Policy Bureau of the Ministry of Environment, said, "The revised subsidy scheme contains measures to induce the production of electric two-wheeled vehicles that can satisfy consumers and improve user convenience." Park added, "The increasing use of electric two-wheeled vehicles is expected to reduce greenhouse gas emissions and thus improve the air quality. It will also create industrial and economic effects that invigorate innovative projects, such as a battery sub ion economy model."

Contact: Chung Yoon-hwa, Deputy Director

Air Quality Future Strategy Division / +82-(0)44-201-6882

Foreign Media Contact: Chun Minjo(Rachel)

+82-(0)44-201-6055 / rachelmchun@korea.kr