In this study, we surveyed EV subsidization policies worldwide and identified issues with the current EV subsidization program in Korea. The current EV subsidy program in Korea has three main flaws.
First, the current EV subsidization program in Korea lacks a long-term plan. EV subsidy amounts vary according to market and political conditions. This flexible subsidy program ensures that subsidy amounts can be readjusted according to changes in supply and demand, but fails to garner enough trust and confidence from consumers.
Second, the current policy neglects to recognize the eco-friendly contributions of EVs and raise the environmental awareness of consumers. Consumers are willing to purchase EVs, despite their relatively higher prices, because of their ability to help protect the environment. It is important for Korean policymakers to redesign the subsidization program so that the positive externalities generated by driving EVs can directly benefit EV drivers.
Third, the current policy benefits only individual consumers and fails to solve one of the main questions plaguing the EV market—i.e., whether EV demand should be raised first or whether charging infrastructure should be expanded first. If EV subsidies, however, can be redesigned to simultaneously encourage consumers to choose EVs and encourage private investors to invest in the charging market, the network effects on the EV market will be increased.
In this study, we also explored ways that the current EV subsidization policy in Korea could be improved. Policy directions were drawn based on data from our opinion poll and simulations, literature reviews, and collaborations with experts.
First, the EV subsidy program should be redesigned with the goal of enhancing both the direct and indirect network effects on the EV market.
Second, the EV subsidy program should be designed to minimize ethical issues, which have been the source of various subsidy program failures worldwide.
Third, the EV subsidy program should be backed by a systematic long-term plan in order to gain the confidence of EV consumers.
Fourth, the EV subsidy program should be designed so that the positive externalities generated by driving EVs directly benefit EV drivers.
EV purchase subsidies are the most important policy instrument in the early stages of fostering EV demand. Purchase subsidies by themselves, however, cannot achieve the objective of the subsidy program. EV purchase subsidies should be redesigned to ensure the success of the subsidization policy, with other policy measures put in place as needed.
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Appendix 1. Program C Coding
#include <stdio.h>
#include <stdlib.h>
#include <math.h>
#define YEARS 14
#define BETA_PRICE -0.000674
#define BETA_EFF 0.0726408
#define BETA_CO2 -0.0016254
#define BETA_DIST 0.001891
#define BETA_TIME -0.0167026
#define SIG_M 20.0
#define SIG_A 3000000.0
#define EV_R 0.1047
#define TOTAL_GOV_AID 250000000
double remain_gov_aid = TOTAL_GOV_AID;
double gov_aid;
#define TAX 7
#define light_EV_0 8696
#define small_EV_0 8696
#define small_PHEV_0 225440
#define small_HEV_0 225440
int cn_light_EV = light_EV_0;
int cn_small_EV = small_EV_0;
int cn_small_PHEV = small_PHEV_0;
int cn_small_HEV = small_HEV_0;
double *price_batt_light_EV;
double *price_batt_small_EV;
double *price_batt_small_PHEV;
double *price_batt_small_HEV;
double price_light_GAS;
double price_light_EV;
double price_small_GAS;
double price_small_DISEL;
double price_small_PHEV;
double price_small_HEV;
double price_small_EV;
int ncars_light_GAS;
int ncars_light_EV;
int ncars_small_GAS;
int ncars_small_DISEL;
int ncars_small_PHEV;
int ncars_small_HEV;
int ncars_small_EV;
int *newcars_light;
int *newcars_small;
int ncars_total_EV = 0;
double *coefficients;
int selectcartype_byutilityfunc_for_light (void);
int selectcartype_byutilityfunc_for_small (void);
double fun_utility (int);
void setting_parameters (void);
void car_price (void);
void count_cars (int);
int year, month;
int cars[1000000000];
int main (int argc, char **argv) {
int i;
int newcars_total;
double p, p_light;
if (argc != 2) {
printf (" %s seed\n", argv[0]);
exit (0);
} //setting
srand48(atoi(argv[1]));
printf ("setting_parameters\n");
setting_parameters();
//runing
printf ("start simulation\n");
printf
("year\tlight_GAS\tlight_EV\tsmall_GAS\tsmall_DISEL\tsmall_PHEV\tsmall_HEV\tsmall_EV\tprice_light_GAS\tprice _light_EV\tprice_small_GAS\tprice_small_DISEL\tprice_small_PHEV\tprice_small_HEV\tprice_small_EV\tacces\n");
for(year=0; year<YEARS; year++) {
car_price(); //vehicle price calculation
//gov_aid = price_small_EV - price_small_GAS;
gov_aid = 1700 - 100*year; //government subsidy policy if (gov_aid < 0)
gov_aid = 0;
newcars_total = newcars_light[year] + newcars_small[year];
p_light = (double) newcars_light[year] / newcars_total;
for(i=0; i<newcars_total; i++) {
p = drand48();
if ( p >=0 && p < p_light)
cars[i] = selectcartype_byutilityfunc_for_light (); // select gasoline vehicles and EVs among compact vehicles
else
cars[i] = selectcartype_byutilityfunc_for_small (); // select gasoline and diesel vehicles, PHEVs, HEVs, and EVs, among small vehicles
}
count_cars(newcars_total);
printf ("%d\t%d\t%d\t%d\t%d\t%d\t%d\t%d\t%g\t%g\t%g\t%g\t%g\t%g\t%g\t%g\t%g\n", year+2017, ncars_light_GAS, ncars_light_EV, ncars_small_GAS, ncars_small_DISEL, ncars_small_PHEV, ncars_small_HEV, ncars_small_EV, price_light_GAS, price_light_EV, price_small_GAS, price_small_DISEL, price_small_PHEV, price_small_HEV, price_small_EV, remain_gov_aid, 1 / (1 + SIG_M * exp(- ncars_total_EV/SIG_A)));
} }
void car_price (void) {
int idx;
double r = EV_R;
idx = 0*14*5 + year*5;
price_light_GAS = coefficients[idx];
price_light_EV = price_batt_light_EV[year] + 2584.9*exp(-r*log(cn_light_EV)) + 11276.5*exp(- r*log(cn_light_EV));
idx = 2*14*5 + year*5;
price_small_GAS = coefficients[idx];
idx = 3*14*5 + year*5;
price_small_DISEL = coefficients[idx];
price_small_PHEV = price_batt_small_PHEV[year] + 2013.8*exp(-r*log(cn_small_PHEV)) + 9604.9*exp(- r*log(cn_small_PHEV));
price_small_HEV = price_batt_small_HEV[year] + 1474.2*exp(-r*log(cn_small_HEV)) + 7578.1*exp(- r*log(cn_small_HEV));
price_small_EV = price_batt_small_EV[year] + 1748*exp(-r*log(cn_small_EV)) + 6883*exp(- r*log(cn_small_EV));
}
void setting_parameters (void) {
FILE *f;
int i, j, idx;
char buff[100];
int tmp;
f = fopen ("data_newcars_light.txt", "r");
newcars_light = malloc(sizeof(int)*YEARS);
for (i=0; i<YEARS; i++)
fscanf (f, "%d\n", newcars_light+i);
fclose (f);
f = fopen ("data_newcars_small.txt", "r");
newcars_small = malloc(sizeof(int)*YEARS);
for (i=0; i<YEARS; i++)
fscanf (f, "%d\n", newcars_small+i);
fclose (f);
coefficients = malloc(sizeof(double)*7*12*5);
f = fopen ("data_coeff.txt", "r");
for (j=0; j<7; j++) {
fscanf (f, "%s\t%s\t%s\t%s\t%s\t%s\n", buff, buff, buff, buff, buff, buff);
fscanf (f, "%s\t%s\t%s\t%s\t%s\t%s\n", buff, buff, buff, buff, buff, buff);
fscanf (f, "%s\t%s\t%s\t%s\t%s\t%s\n", buff, buff, buff, buff, buff, buff);
for (i=0; i<YEARS; i++) {
idx = j*14*5 + i*5;
fscanf (f, "%d\t%lg\t%lg\t%lg\t%lg\t%lg\n", &tmp, coefficients+idx, coefficients+idx+1, coefficients+idx+2, coefficients+idx+3, coefficients+idx+4);
} }
fclose (f);
f = fopen ("data_price_batt.txt", "r");
price_batt_small_EV = malloc(sizeof(double)*YEARS);
price_batt_small_PHEV = malloc(sizeof(double)*YEARS);
price_batt_small_HEV = malloc(sizeof(double)*YEARS);
price_batt_light_EV = malloc(sizeof(double)*YEARS);
for (i=0; i<YEARS; i++)
fscanf (f, "%lg\t%lg\t%lg\t%lg\n", price_batt_small_EV+i, price_batt_small_PHEV+i, price_batt_small_HEV+i, price_batt_light_EV+i);
fclose (f);
/*
for(type=0; type<7; type++)
for(year=0; year<YEARS; year++) {
idx = type*14*5 + year*5;
printf("cartype %d\t%d\t%g\t%g\t%g\t%g\t%g\n", type, year+2017, coefficients[idx], coefficients[idx+1], coefficients[idx+2], coefficients[idx+3], coefficients[idx+4]);
}
*/
}
void count_cars (int ncars) {
int i;
ncars_light_GAS = 0;
ncars_light_EV = 0;
ncars_small_GAS = 0;
ncars_small_DISEL = 0;
ncars_small_PHEV = 0;
ncars_small_HEV = 0;
ncars_small_EV = 0;
for (i=0; i<ncars; i++) {
if ( cars[i] == 11 )
ncars_light_GAS++;
else if ( cars[i] == 12 ) {
ncars_light_EV++;
cn_light_EV++;
ncars_total_EV++;
}
else if ( cars[i] == 21 )
ncars_small_GAS++;
else if ( cars[i] == 22 )
ncars_small_DISEL++;
else if ( cars[i] == 23 ) {
ncars_small_PHEV++;
cn_small_PHEV++;
ncars_total_EV++;
}
else if ( cars[i] == 24 ) {
ncars_small_HEV++;
cn_small_HEV++;
}
else if ( cars[i] == 25 ) {
ncars_small_EV++;
cn_small_EV++;
ncars_total_EV++;
} }
}
int selectcartype_byutilityfunc_for_light (void) {
int cartype;
double p;
double cp_light_GAS;
double cp_light_EV;
double utility_light_GAS;
double utility_light_EV;
double utility_light_total;
utility_light_GAS = fun_utility (11) * 1.00 * 0.347;
utility_light_EV = fun_utility (12) * 0.24 * 0.154;
utility_light_total = utility_light_GAS + utility_light_EV;
cp_light_GAS = utility_light_GAS / utility_light_total;
cp_light_EV = cp_light_GAS + utility_light_EV / utility_light_total;
p = drand48();
if ( p >= 0 && p < cp_light_GAS ) cartype = 11;
else if ( p >= cp_light_GAS && p < cp_light_EV ) {
cartype = 12;
if (remain_gov_aid > gov_aid)
remain_gov_aid = remain_gov_aid - gov_aid;
}
return (cartype);
}
int selectcartype_byutilityfunc_for_small (void) {
int cartype;
double p;
double cp_small_GAS;
double cp_small_DISEL;
double cp_small_PHEV;
double cp_small_HEV;
double cp_small_EV;
double utility_small_GAS;
double utility_small_DISEL;
double utility_small_PHEV;
double utility_small_HEV;
double utility_small_EV;
double utility_small_total;
utility_small_GAS = fun_utility (21) * 3.300 * 0.347;
utility_small_DISEL = fun_utility (22) * 0.540 * 0.145;
utility_small_PHEV = fun_utility (23) * 0.020 * 0.133;
utility_small_HEV = fun_utility (24) * 0.120 * 0.133;
utility_small_EV = fun_utility (25) * 2.000 * 0.154;
utility_small_total = utility_small_GAS + utility_small_DISEL + utility_small_PHEV + utility_small_HEV + utility_small_EV;
cp_small_GAS = utility_small_GAS / utility_small_total;
cp_small_DISEL = cp_small_GAS + utility_small_DISEL / utility_small_total;
cp_small_PHEV = cp_small_DISEL + utility_small_PHEV / utility_small_total;
cp_small_HEV = cp_small_PHEV + utility_small_HEV / utility_small_total;
cp_small_EV = cp_small_HEV + utility_small_EV / utility_small_total;
p = drand48();
if ( p >= 0 && p < cp_small_GAS ) cartype = 21;
else if ( p >= cp_small_GAS && p < cp_small_DISEL ) cartype = 22;
else if ( p >= cp_small_DISEL && p < cp_small_PHEV ) cartype = 23;
else if ( p >= cp_small_PHEV && p < cp_small_HEV ) cartype = 24;
else if ( p >= cp_small_HEV && p < cp_small_EV ) {
cartype = 25;
if (remain_gov_aid > gov_aid)
remain_gov_aid = remain_gov_aid - gov_aid;
}
return (cartype);
}
double fun_utility (int cartype) {
double utility;
double eff, price, time, dist, co2;
double price_batt, price_elec, price_ICE, r = EV_R;
double tax;
double acces;
int idx;
if ( cartype == 11 ) {
idx = 0*14*5 + year*5;
acces = 1;
tax = TAX/100.0;
price = price_light_GAS*(1+tax);
}
else if ( cartype == 12 ) {
idx = 1*14*5 + year*5;
acces = 1 / (1 + SIG_M * exp(-ncars_total_EV/SIG_A));
//acces = acces * (1.0 + (year+1)*0.01);
if (remain_gov_aid > gov_aid)
price = price_light_EV - gov_aid;
else
price = price_light_EV;
}
else if ( cartype == 21 ) {
idx = 2*14*5 + year*5;
acces = 1;
tax = TAX/100.0;
price = price_small_GAS*(1+tax);
}
else if ( cartype == 22 ) {
idx = 3*14*5 + year*5;
acces = 1;
tax = TAX/100.0;
price = price_small_DISEL*(1+tax);
}
else if ( cartype == 23 ) {
idx = 4*14*5 + year*5;
acces = 1 / (1 + SIG_M * exp(-ncars_total_EV/SIG_A));
//acces = acces * (1.0 + (year+1)*0.01);
price = price_small_PHEV - 400;
}
else if ( cartype == 24 ) {
idx = 5*14*5 + year*5;
acces = 1;
price = price_small_HEV;
}
else if ( cartype == 25 ) {
idx = 6*14*5 + year*5;
acces = 1 / (1 + SIG_M * exp(-ncars_total_EV/SIG_A));
//acces = acces * (1.0 + (year+1)*0.01);
price = price_small_EV;
if (remain_gov_aid > gov_aid)
price = price_small_EV - gov_aid;
else
price = price_small_EV;
}
eff = coefficients[idx+1];
co2 = coefficients[idx+2];
dist = coefficients[idx+3];
time = coefficients[idx+4];
utility = BETA_EFF*eff + BETA_PRICE*price + BETA_TIME*time + BETA_DIST*dist + BETA_CO2*co2;
return (acces*exp(utility));
}