The government has cut subsidies for Chinese electric buses using lithium iron phosphate batteries by 70%. This move is intended to curb the dominance of Chinese electric buses in the route bus market.

As a result, Chinese electric buses equipped with lithium iron phosphate batteries, such as those from BYD and Haiger, will receive subsidies ranging from 42 million won to 49 million won. In contrast, Hyundai’s Elec City, which uses lithium-ion batteries, is set to receive the maximum subsidy of 70 million won, equivalent to 100% funding.

For a low-floor electric bus priced at around 330 million won, the combined government, local subsidy, and low-floor bus subsidies will significantly reduce costs. The Hyundai Elec City can obtain 70 million won from the government and local subsidies along with an additional 92 million won for being a low-floor bus, bringing the final purchase price to roughly 100 million won.

In contrast, Chinese electric buses will receive 49 million won from national government subsidies and local subsidies, along with an additional 92 million won for low-floor bus approvals, making the total cost around 140 million won, which is 40 million won more expensive than the Hyundai Elec City.

The government brought about this adjustment in electric bus subsidy policies primarily due to the challenges faced by domestic electric bus manufacturers in the face of strong competition from Chinese counterparts.

According to Kai’su, last year saw the sales of Chinese electric buses reach a total of 497 units—198 from Haiger, 90 from BYD, 79 from Kinglong, and 92 from CHTC. This figure constitutes 57% of the 858 units sold for Hyundai’s Elec City. In the overall market, the share of Chinese buses stands at 36.6%, with one out of three transport operators opting for Chinese electric buses.

Until now, Chinese electric buses have been preferred by transport operators for their 100-200 km longer driving range compared to their domestic counterparts. However, if the pricing dynamics shift in favor of domestic electric buses, it is anticipated that the preference for Chinese buses will decline among transport operators.

It remains to be seen how Chinese electric bus manufacturers will respond to these changes.

Lee Sang-jin daedusj@autodiary.kr