[Exclusive] 115 Billion Won in State Funds Go to 'China-Made' Vehicles... Tesla Takes 12% of Subsidies [The Hole in EV Subsidies]

Only 6.6 Billion Won Less in Subsidies Than Hyundai

Domestic Brands' Advantage Questioned... Effectiveness of the EV Subsidy System Under Scrutiny

Tesla, which is currently ranked first in imported car sales this year, is estimated to have received as much as 115 billion won in government subsidies for electric vehicles in the first half of 2026. This amount accounts for 12% of the annual budget for such subsidies, and comes within just 6.6 billion won of the subsidies awarded to Hyundai Motor, Korea’s top domestic automaker. A significant portion of the tax money used to promote the spread of EVs is thus flowing to car brands imported from China and other countries.

According to the Korea Automobile Importers & Distributors Association and other sources on August 18, Tesla's domestic sales in the first half of the year totaled 66,376 units. Of these, 52,064 units were the subsidy-eligible 'Model Y,' and 10,392 units were the 'Model 3.' In total, 62,456 vehicles were sold with subsidies.

Based on the eco-friendly vehicle subsidy policy of the Ministry of Climate, Environment and Energy, the respective subsidies for the Model Y Premium (1.7 million won), Long Range (2.1 million won), L (2.15 million won), and all lines of Model 3 (from 1.68 million to 2.1 million won) total up to an estimated 114.6 billion won in subsidies received by Tesla customers. This represents 12.2% of this year's 936 billion won national EV passenger car subsidy budget, effectively monopolized by Tesla. Tesla Korea, which used to import vehicles produced at the Fremont plant in the US, has since 2024 been importing all trims of Model Y and Model 3 manufactured at the Shanghai Gigafactory in China for domestic sales.

During the same period, Hyundai Motor sold a total of only 29,032 units, combining eight models including the Kona Electric, Ioniq 5·6·9, and various Genesis electrified models. The minimum subsidy Hyundai Motor received is estimated at 121.2 billion won (calculated based on the minimum subsidy per model).

Hyundai Motor received subsidies of at least 2.45 million won and up to 5.7 million won per vehicle, with an average subsidy of 4.42 million won, which is much higher than Tesla’s average of 1.91 million won per car. However, due to the more than two-fold disparity in sales volumes, the total amount of subsidies paid by the government to each company is not significantly different. In fact, if subsidies paid by local governments in conjunction with the national subsidy are also taken into account, the difference between the two companies could narrow further or even be reversed.

As a result, there are growing criticisms that the electric vehicle subsidy system, which was originally seen as advantageous to domestic automakers, is failing to be effective in the market.

This year, the government added new eligibility criteria for subsidies, such as the operation of direct service centers, spare parts supply chains, and securing maintenance personnel, favoring domestic brands through after-sales management evaluations of manufacturers and importers. However, Tesla has managed to overcome these changes head-on by lowering prices and aggressively expanding supply, undermining the policy’s intended effect of protecting the domestic industry.

Hangoo Lee, a special professor at Pyeongtaek University, explained, “Tesla has eliminated its premium models and is now producing only two mid-priced models, which allows for significant price reduction. Although consumer resistance to Chinese manufacturing was expected, in reality, people in their 20s and 30s do not seem to mind, and this has enabled Tesla to quickly gain a foothold in the Korean market.”

This content was produced with the assistance of AI translation services.