SEOUL—South Korea on Tuesday unveiled a five-year plan to drastically increase the number of environmentally-friendly cars on its streets, as auto makers' emissions come under intensifying scrutiny globally.
The government aims to ensure that hybrids, electric vehicles and hydrogen fuel-cell cars account for 20% of all new cars sold in the country by 2020, up sharply from the current 2%, according to the plan by the Ministry of Trade, Industry, and Energy.
The moves are part of Korea's wider schemes to cut greenhouse gas emissions from vehicles by 3.8 million tons, or 11%, from business-as-usual levels over the next five years, the ministry said in a statement.
Electric-vehicle adoption has been relatively slow in Korea compared with other advanced markets because of the high price tags, the lack of charging infrastructure and low consumer perceptions of such cars as a personal transport model.
Korea has tried to boost electric-vehicle adoption by providing consumer subsidies and mandating the purchase of vehicles without internal-combustion engines for at least 25% of the government's new vehicle fleet starting this year.
In a symbolic project to have more green cars on the road, the country has said it aims to replace all 370,000 vehicles on the southern resort island of Jeju with electric ones by 2030.
The ministry said Tuesday it will spend 150 billion won until 2020 to help local auto makers improve the driving range of battery-powered cars and lower retail prices of fuel-cell electric vehicles.
Also included in the proposed measures is the installation of 1,400 public electric-vehicle charging stations and 80 similar facilities for fuel-cell cars throughout the nation by 2020.
The announcement comes as car makers have sought to introduce greener cars to meet stiff regulatory targets, with emissions under increased scrutiny after Volkswagen AG VLKAY -3.29 % admitted in September to using software to manipulate tests.
Kia Motors Corp. 000270 -1.48 % , a sister firm of Hyundai Motor Co. HYMLY -0.01 % , said last month it aims to expand its green car lineup to 11 models by 2020 from four now to improve its image and meet tightening emissions and fuel-economy regulations.
The two companies earlier this year announced 11.3 trillion won ($9.6 billion) of investment in eco-friendly car projects until 2018, to help elevate their position in the green vehicle market, which is currently led by Japanese car makers such as Toyota Motor Corp. TM -2.11 %
Investment bank Barclays BCS -2.37 % expects the global electric-vehicle market to grow to $12.4 billion in 2020 from $4.3 billion in 2014.
Hyundai, the world's fifth-largest auto maker when combined with Kia, plans to triple its number of fuel-efficient cars to 22 over the next five years to address concerns about the two companies' weak green track record and competitiveness in fuel economy.
Amid the global auto industry trend toward more eco-friendly vehicles, the Korean duo's carbon dioxide emissions were higher in 2014 than the previous year, raising the possibility that they may lose ground in the effort to meet tough regulatory targets, particularly in Europe, by the end of the decade.
The European Union has some of the most stringent environmental targets and wants car makers to achieve average emissions of 95 grams of carbon dioxide per kilometer by 2021. Car makers that fail to meet the target will face fines of 95 euros per gram of carbon dioxide above the limit, multiplied by the number of cars they sell.
Lee Hyeoun-dong, director, Eco Engineering group at Hyundai Mobis Co. 012330 -0.84 % —the auto-parts unit of Hyundai—said in an interview last week that the companies will be able to meet that goal.
"Meeting that goal could be a matter of product mix because smaller cars emit a smaller amount of gases," said Mr. Lee. "We're also going to adopt green technology across all our fleet in the near future."
Write to In-Soo Nam at In-Soo.Nam@wsj.com
Source: South Korea Unveils Plan to Rev Up Sales of Greener Cars
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