South Korea has unveiled a massive upgrade to its hydrogen vehicle subsidy programme, vastly increasing the number of fuel cell electric vehicles (FCEVs) it is prepared to support — and revealed that 95% them will be passenger cars that could end up with their purchase price halved.
This is despite a growing consensus — illustrated by a recent report from the US federal government — that the opportunity for hydrogen FCEVs in the global passenger vehicle market is shrinking fast, due to infrastructure constraints and high running costs relative to battery-electric equivalents.
Nevertheless, the new proposal could see millions of dollars lavished on up to 16,000 cars, 700 buses and 200 trucks and municipal waste collection vehicles — potentially resulting in a spike in hydrogen vehicles purchases in South Korea this year.
Under the new measures, the purchase of a new passenger car will qualify for government support of 22.5m won ($18,000) with some states adding local subsidies on top — Busan and Incheon are each offering top-ups of up to 33.5m won ($27,500).
The highest subsidies in these areas could effectively slash the price of hydrogen cars by almost half, as the popular Nexo model from Hyundai costs an equivalent to $59,000 in South Korea, according to a price list from the company.
The total price tag of the updated scheme is yet to be revealed by Seoul but the car scheme alone could cost $300m if all 16,000 units are sold with maximum subsidies.
“The 2030 National Greenhouse Gas Reduction Target (NDC) is difficult to achieve without the supply of zero-emission fuel cell vehicles,” said Park Yeon-jae, director general of atmospheric environment policy at the South Korean Ministry of Environment.
Purchased trucks and buses qualify for 21m-26m won ($17,000-$21,000) of subsidies and garbage trucks for 72m won ($59,000).
The 2023 subsidy scheme expands significantly last year’s South Korean subsidy scheme, which had a price tag of about $157m, targeting the purchase of 624 hydrogen buses that were planned be in operation in the south of the country by the end of 2025.
The densely populated country is aiming to achieve a 40% reduction in emissions by 2030. Because of the limited available land for renewables projects, it wants 33% of its energy to come from hydrogen by 2050 — 60% of which will be imported. It also plans to have 5.3 million FCEVs on its roads by 2050, powered by at least 2,000 hydrogen filling stations.
A total of 29,733 hydrogen vehicles are currently on the road in South Korea, but the number of newly registered hydrogen vehicles grew sharply from 4,194 in 2019 to 10,256 last year.
Analysis from UK-based research firm Interact Analysis has found that the share of passenger cars in the global FCEV market is shrinking — falling from 90% in 2021 to 80% in 2022, and projected to fall to around 40% by 2030 as hydrogen in heavy trucking ramps up.
