Korea ups EV subsidies as Chinese brands signal arrival

As a wave of Chinese EV brands prepares to enter the Korean market this year, the Korean government is expanding subsidies in an all-out effort to bolster sales of domestically produced EVs.

Hyundai Ioniq 5s are being charged in Incheon. [YONHAP]

As a wave of Chinese EV brands prepares to enter the Korean market this year, the Korean government is expanding subsidies in an all-out effort to bolster sales of domestically produced EVs.

The move is an unusual one for Seoul, which has gradually trimmed EV incentives in recent years as local automakers and battery makers such as Hyundai Motor and LG Energy Solution have been hit hard by weakening global demand.

The Ministry of Climate, Energy and Environment said on Thursday that it has finalized its 2026 EV subsidy plan and raised the maximum incentive to 6.8 million won ($4,710) from 5.8 million won.

Under the revised plan, buyers who switch from an internal combustion engine vehicle to a new EV will receive an additional 1 million won. The benefit will neither apply to transfers or sales between immediate family members nor to used vehicles.

BYD Atto 3 [BYD KOREA]

The price cap for vehicles qualifying for full subsidy support will remain at 53 million won. Beginning in 2027, the threshold will be lowered to 50 million won.

The government will also extend subsidies to commercial EVs that previously received no support, including small electric vans and midsized to large electric trucks. The move is seen as part of the subsidy framework for Kia’s PV5 model.

Subsidy caps are set at 15 million won for small electric vans, 40 million won for midsize electric trucks and 60 million won for large electric trucks.

“Because subsidies have been gradually declining, a quantum leap is needed to accelerate EV adoption,” said Seo Young-tae, the director general of the Green Transition Policy Bureau under the Ministry of Climate, Energy and Environment.

“The expansion also aims to meet the government’s target of 40 percent of new vehicles being electric by 2030 amid slower-than-expected adoption and safety concerns, including EV fires.”

Additionally, charging range and energy density requirements have been tightened, giving domestic models an advantage over imports.

While Chinese EVs such as BYD generally use lithium iron phosphate, or LFP, batteries, which are more affordable but have shorter ranges, Korean brands employ nickel manganese cobalt, or NCM, batteries, which are pricier but offer longer driving distances.

Chinese models, however, are already making inroads. The Tesla Model Y ranked as the best-selling EV this year in Korea, and BYD secured a stable foothold, selling 4,955 units through November 2025, making it the third best-selling imported EV brand.

Xpeng, Li Auto and Zeekr are expected to enter the Korean market in 2026.

A new EV-specific insurance plan has also been introduced. The policy clarifies where responsibilities lie and compensation for cases in which the cause of an EV fire is uncertain or reignition occurs.

The government aims to reach a cumulative 4.2 million EVs by 2030, but progress has been slow. As of September 2025, only 851,119 EVs had been registered. A total of 1.4 million new EVs were registered from January through the end of October 2025, but EVs only accounted for just 13.6 percent of total sales, according to data from market tracker Car Is You.

BY SARAH CHEA [chea.sarah@joongang.co.kr]