South Korea’s government unveils a new EV subsidy policy to bolster domestic automakers Hyundai and Kia against rising competition from Tesla and BYD, aiming to level the playing field in the electric vehicle market.
The revised policy comes in response to Tesla and BYD’s price cuts, triggered by the use of lower-cost LFP batteries, which led to a price war in the global EV market.
Under the new plan, subsidies are capped at around $4,800, with eligibility determined by factors like vehicle range, price, and battery type. Notably, vehicles with “lower-performance batteries,” such as LFP batteries from China, will see reduced subsidies.
This move targets BYD, which dominates the LFP battery market, and Tesla, whose Model Y sales surged in South Korea after introducing a more affordable variant with LFP batteries.
Meanwhile, Hyundai and Kia’s EVs, like the IONIQ 5 and EV6, maintain steady subsidies, offering competitive ranges and NCM batteries that qualify for higher subsidies.
With the adjusted policy, Hyundai’s IONIQ 5 could enjoy a significant subsidy advantage over the Tesla Model Y, potentially reshaping the EV market landscape in South Korea.