Imported EVs receive huge subsidies in Korea while Hyundai, Kia excluded in U.S.

Tesla Inc.’s “Model 3 Performance” [Photo provided by Tesla]

Much concern is being voiced about reverse discrimination in the electric vehicle (EV) industry as consumers that buy imported EVs in South Korea receive subsidies but those that buy Korean EVs in the U.S. are excluded from the state benefits under the Inflation Reduction Act (IRA).

According to an integrated EV database of the Ministry of Environment on Wednesday, EVs sold by 8 foreign automakers - Tesla Inc., GM Korea Co. of the U.S., Mercedes-Benz Group AG, Bayerische Motoren Werke (BMG) AG, and Volkswagen AG of Germany, Volvo AB and Polestar Performance AB of Sweden and multinational company Stellantis NV - are eligible for subsidies in Korea this year.

Tesla had the largest number of subsidy-eligible car models at six, followed by Mercedes-Benz and Stellantis at four each, and Volkswagen at three.

EV subsidies in Korea come from central and local government expenditures.

Buyers of Tesla’s six models including “Model 3 Performance” are all eligible for a subsidy of 2.6 million won ($1,995.6) from the central government budget. Seoul residents receive an additional 680,000 won while residents of Busan 1.14 million won and those of Geochang, South Gyeongsang Province 4.39 million won in local subsidies for buying the same Tesla model.

This means the Korean central and local governments grant subsidies of up to 6.99 million won to Tesla vehicles. The central government subsidy for GM’s “Chevrolet Bolt EV” and “Chevrolet Bolt EUV” amounts to 6.4 million won. A buyer of a Bolt EV in Seoul can receive a subsidy worth 8.09 million won including local subsidies of 1.69 million won. Residents in Geochang are eligible for a local subsidy of 10.82 million won that is far greater than central government subsidies, resulting in savings up to 17.22 million won.

GM Korea Co.‘s “Chevrolet Bolt EV” [Photo provided by GM Korea]

Bolt EV is a vehicle produced in the U.S for exports to Korea. In other words, the Korean central and local governments are offering subsidies of up to 17.22 million won for U.S. EVs.

These generous subsidies have lifted the sales of foreign cars in Korea.

Last year, 7,323 units of Tesla Model 3 and 7,248 units of Model Y were newly registered in Korea, and 1,913 units of Bolt EUV and 699 units of Bolt EV were sold during the same period.

Other popular EVs of global finished car brands also benefit from government subsidies. A Seoul resident gets 7.04 million won for buying BMW’s “Mini Cooper SE,” 3.47 million won for Mercedes-Benz’s “EQB 300 4MATIC,” a 5-seater EV, and 2.56 million won for Volvo’s “XC40 Recharge Twin.”

The government has decided to provide subsidies for all EV purchases under 57 million won from this year, an increase from 55 million won last year.

The scene is different in the U.S. when consumers there buy Korean EVs. Only EVs produced by U.S. automakers such as Tesla, GM, and Ford Motor Co. will be eligible for a tax credit of up to $7,500 under the detailed guidelines of the IRA. Korean automakers Hyundai Motor Co. and Kia Corp. do not qualify for the tax credits in the U.S.