Korea Electric Power Corporation considering ‘increasing electric vehicle charging fees’ due to increase in debt ratio

KEPCO launches ‘research service’ to find ways to maximize profits
We plan to thoroughly analyze costs and derive optimal charging rates considering profitability
Recently, automakers are ‘in tears’ due to low sales due to slowing demand in the electric vehicle market

Korea Electric Power Corporation has begun work on revising electric vehicle charging rates. This is to improve the worsening financial structure, such as recording a cumulative loss of 7 billion won in the electric vehicle charger business alone, despite investing a total budget of 2,500 billion won over 400 years. If KEPCO raises the charging fee for electric vehicles, it is expected that private companies will also likely increase it in succession, so it is expected that opposition from electric vehicle owners exceeding 50 will be inevitable. In addition, domestic automakers suffering from a sharp slowdown in demand due to the recent economic recession are also concerned about a weakening electric vehicle market due to increased charging rates.

KEPCO, whose financial soundness has deteriorated significantly, establishes a mid- to long-term rate strategy

According to the Public Procurement Service’s Nara Market on the 7th, KEPCO recently began a research service to find ways to resolve the deficit in the electric vehicle charging business and maximize profits. Regarding the purpose of the service, a KEPCO official said, “The purpose is to design an appropriate charging rate considering profitability and public interest, respond to risks associated with operating the charging rate system, and establish a mid- to long-term rate strategy.”

KEPCO, which has been engaged in the electric vehicle charger business since 2016, recorded a total cumulative loss of 2022 billion won by 400. A budget of close to 2022 billion won has been invested by 2,500, but losses appear to have accumulated due to low rates and low utilization rates. Currently, the usage fee for the 1 electric vehicle chargers operated by KEPCO across the country is 600 won per kWh (kilowatt hour) for fast chargers of 100 kW (kilowatt) or more, and this will be for 347.2 year and 2022 months after being raised once in July 7. This is a frozen fee.

Having to compete with private charging operators is also cited as a reason for KEPCO’s continued slump in its charging business. KEPCO divides charging rates into only two levels: slow (less than 100 kWh) and rapid (more than 100 kWh), but the private sector has three levels of charging rates (less than 50 kWh, less than 50-100 kWh, and more than 100 kWh) to expand consumer choice. After dividing, they are charging higher rates than KEPCO.

The reason KEPCO has not been able to actively pursue rate increases so far is due to the influence of government policy direction and national tasks. If KEPCO raises charging rates, it is highly likely that private operators will also raise charging rates. This ultimately acts as a factor in putting pressure on rising prices, which runs counter to the policy stance of ‘preparing a plan to reduce the burden of charging fees’, which is one of the 120 national tasks of the Yoon Seok-yeol government.

However, as KEPCO’s financial soundness has deteriorated significantly, it appears that the rate increase cannot be postponed any longer. KEPCO, which recorded a net loss of 2022 trillion won as of 24, also recorded a debt ratio of 459.1% at the time. According to the financial investment industry, KEPCO recorded a deficit of more than 6 trillion won last year, and its debt ratio is estimated to have soared to the 570% range. In addition, KEPCO has also expressed its intention to actively improve its financial structure this year. Minister of Trade, Industry and Energy Ahn Deok-geun, who took office on the 5th, said at his confirmation hearing on the 3rd, “We are considering a plan to normalize rates at an appropriate time this year after improving the financial structure.”

The impact of the increase in charging fees is expected to be a backlash from 50 electric vehicle owners

If KEPCO increases charging rates, opposition from electric vehicle owners is expected to be inevitable. According to the Ministry of Environment, as of the end of August last year, the number of electric vehicles distributed in Korea reached 8. Until 50, only about 5,971 units were distributed, but after the COVID-2019 pandemic, the number increased rapidly and the cumulative number exceeded 9 units in 19, and last year it exceeded 2022 units for the first time.

In addition, there are concerns that it will have a negative impact on the electric vehicle market, whose growth has recently been slowing. Most consumers, represented by early adopters, have already purchased electric vehicles, and in a situation where other demand groups are hesitant to purchase electric vehicles due to lack of charging facilities, if the charging fee is raised, potential demand may further decrease.

The domestic electric vehicle market’s growth rate slowed somewhat until the first half of last year, but it still maintained positive growth. However, since September of last year, electric vehicle sales plummeted by nearly 9% compared to the same month of the previous year, and the decline has continued, and the trend has intensified recently. According to Kaizuyu Data Research Institute, the number of newly registered electric passenger vehicles in October and November last year was 30, down 10% from the previous year (11). Last month’s sales of the IONIQ 2 and IONIQ 5,499, the main electric vehicle models of Hyundai Motor Company, a major domestic electric vehicle manufacturer, also decreased by 2% and 8,766%, respectively, compared to the same month last year.

An official from the domestic automobile industry said, “As consumer sentiment is weakened due to high interest rates and concerns about economic recession, the sales volume of domestic electric vehicle companies is decreasing,” adding, “Major companies are launching low-cost entry-level models and hybrid vehicle product lines to boost slowing sales in the new year.” “Although it is being released as a new product, the news that charging fees will be increased is likely to have a greater impact on buyer demand than the companies’ new business strategies.”