Lee Eonju Calls for Production Tax Credits for EVs, Citing Concerns Over Industrial Ecosystem Collapse

Koo Yooncheol: "Tax Credits Should Focus on High Value-Added Batteries"


Lee Eonju: "Tax Credits Ineffective for Battery Companies Operating at a Loss"

On September 11, Assemblywoman Eonju Lee of the Democratic Party of Korea urged that support policies for the domestic electric vehicle industry shift from purchase subsidies to production-stage support in order to protect the local ecosystem.

During the government inspection on economic affairs at the National Assembly that day, Assemblywoman Lee questioned Deputy Prime Minister and Minister of Economy and Finance Yoon Cheol Koo, noting, "The market share of Chinese electric vehicles in the Korean market is rapidly increasing." She warned, "At this rate, it's only a matter of time before it surpasses 50% next year."

She further explained, "Electric vehicles are deeply linked to the battery, steel, and parts industries, as well as to physical AI and the robotics industry. If the auto parts ecosystem collapses, it will be difficult to secure competitiveness in physical AI even if we make large-scale investments." She insisted that the government should reduce the influence of purchase subsidies paid out for Chinese EVs and instead switch to policies that support domestic production bases.

Rep. Eonju Lee of the Democratic Party of Korea is questioning Prime Minister Seongsuk Han during the government inspection on economic affairs held at the National Assembly on September 11, 2026. Photo by Dongju Yoon

In response, Deputy Prime Minister Koo expressed the position that rather than applying a production tax credit to all electric vehicles, it would be more appropriate to focus support on batteries, which provide higher added value. He stated, "The core of electric vehicles is the battery," and explained that the government has included measures to apply a production tax credit for batteries in legislation starting next year.

Assemblywoman Lee countered that support should cover the entire industry ecosystem, including forward and backward linkages such as steel and auto parts, not just batteries. She especially pointed out, "Our domestic battery companies are not profitable, so what use is a tax credit to them?" emphasizing that tax credits are ineffective for companies operating at a loss.

Deputy Prime Minister Koo replied, "We will make even greater efforts for parts that are key to the electric vehicle and autonomous vehicle industries," adding, "For the issue of the EV tax credit, we will seek a reasonable solution through meetings with relevant ministries."

Assemblywoman Lee stressed, "The mother factory and core supply chains must remain in Korea," and emphasized, "We must not use taxpayer money to support foreign-made vehicles, thereby destroying domestic jobs and forfeiting our data sovereignty and economic security."

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