The government has decided to add criteria such as electric-vehicle manufacturers' and importers' "industry contribution" and "research and development capability" to determine whether to pay purchase subsidies starting in the second half of the year, according to reports on the 8th. Analysts say this could likely cut off subsidies for fully built cars imported from overseas, such as Tesla of the United States and BYD of China. Imported cars account for 43% of the domestic EV market as of last year. Some consumers are responding, "Gas prices are high, so I'm trying to buy an EV, but I'm worried they won't give subsidies."
◇ High likelihood of exclusion from subsidies if domestic employment is low and there is no contribution to the parts industry
The Ministry of Climate, Energy and Environment decided to evaluate EV manufacturers and importers by the end of June to determine subsidy recipients under the "2026 electric vehicle supply project subsidy work guideline revision."
Currently, the ministry provides purchase subsidies when consumers buy a new EV that meets standards such as single-charge driving range and battery performance. Major models included for subsidies are Tesla Model 3 and Y, Hyundai Motor the New Ioniq 6, Kia EV3, and BYD Dolphin and Seal. Subsidies are up to 5.8 million won for midsize and large vehicles and 5.3 million won for small and below, respectively.
However, under the new guidelines, consumers who buy certain companies' EVs may receive no subsidies at all. Going forward, the ministry plans to evaluate EV companies on seven criteria and assign scores: ▲business capability ▲technology development ▲after-sales service ▲sustainability ▲ESG (environment, society, governance) response ▲industry contribution ▲safety management. Companies must average above 80 out of 100 points to qualify for subsidies.
Industry officials expect that once the guidelines take effect, the domestic market share of imported EVs, which rose to 42.8% as of last year, could decline. That is because of the items on technology development (5 points), sustainability (15 points), and industry contribution (20 points). Imported cars could receive lower scores than domestic ones on these evaluation items.
On "technology development," the government decided to give higher scores the larger the amount spent over the past three years in Korea on research and development related to EV parts, batteries, and performance development. Because imported brands mainly invest in research and development overseas, their domestic investment records could be relatively lacking compared to domestic companies. On "sustainability," the government said it would review employment status at domestic business sites to assess job creation effects. In addition, for "industry contribution," it will evaluate whether each company conducted joint research and development to support domestic parts makers' transition to EVs, and whether it provided or transferred technology.
A ministry official said, "Until now, we evaluated vehicle performance to pay subsidies, but now we intend to pay subsidies after comprehensively evaluating how much the operators contribute to the domestic industry." The official added, "Imported cars will not be unilaterally disadvantaged," and said, "Some domestic models use Chinese batteries, and in such cases points could be deducted."
◇ Consumers say "will Tesla subsidies be cut off?"... ministry says "we are listening to various opinions"
Some consumers are reacting to the government's retooling of its subsidy policy by saying, "If we buy imported EVs going forward, won't we be unable to receive subsidy benefits?"
With gas prices rising due to the recent Middle East situation, demand has increased to buy EVs with purchase subsidies. Of the 160 local governments nationwide that provide EV subsidies, more than 60% of their budgets were reportedly exhausted in the first quarter. As of the 10th of last month, 52,037 EVs had been supplied this year, 2.6 times last year's level.
Lee So-young of the Democratic Party of Korea also wrote on X (formerly Twitter), "As someone who has worked to expand EVs so far, I find this hard to agree with," adding, "I will formally raise this issue with the government."
In response, a senior ministry official said, "We are listening to a variety of views through multiple channels."