South Korea Responds to Cheap Chinese Batteries and EVs with Updated Subsidy Plan
In response to the increasing presence of low-cost Chinese electric vehicles (EVs) and batteries, South Korea has updated its EV subsidy policies to align with global trends. Similar to actions taken by the United States and the European Union, South Korea’s revised 2024 EV purchase subsidy scheme reduces financial incentives for EVs using primarily Chinese-manufactured lithium iron phosphate (LFP) batteries.
The adjustments to South Korea’s EV subsidy plan were detailed by the Ministry of Environment in the latest revision announced on Feb. 6. Vehicles priced under 55 million Korean won (around $41,000) now qualify for a maximum subsidy of 6.5 million Korean won (approximately $4,900) from the national treasury.
Additional subsidies of up to 1 million Korean won (about $752) are available for specific vehicle discounts. The subsidy allocation considers factors such as the vehicle’s range on a single charge, battery energy density, recyclability of battery components, and the efficiency of the vehicle’s after-sales service management system.
A key feature of the updated subsidy plan is the reduced support for EVs equipped with LFP batteries, primarily sourced from Chinese manufacturers. LFP batteries, along with nickel, manganese, and cobalt (NMC) lithium batteries favored by South Korean battery firms, play a central role in the current EV market.
Under the new guidelines, certain Chinese-made EV models, like the Tesla Model Y using LFP batteries, will see significant reductions in financial incentives. For example, the subsidy for the Tesla Model Y has been cut by over 62 percent, from 5.14 million Korean won to 1.95 million Korean won.
Furthermore, the increased support for South Korean EVs equipped with nickel-manganese-cobalt (NMC) lithium batteries reflects the country’s strategy to enhance its EV industry amidst the rise of Chinese EV imports.
