South Korea will increase subsidies for electric vehiclesโ in 2026, a โmove designed to cushion its โautomotive industry against potential tariffs imposed by theโค United States, the Ministry of Trade, industry and Energy announced Tuesday. The increased financial support aims to maintain โฃthe competitiveness of Korean EV exports as the โU.S. Inflationโ Reduction Act (IRA) incentivizes domestic production and potentially levies tariffs on foreign-made โvehicles.
The planned subsidy boost is a proactive response to growingโ concerns within the โSouth Korean โคauto sector about the impactโ of U.S. trade policies. The IRA, whileโ initially offering incentives for all EVs, increasingly favorsโ North American-assembled vehicles, โคpotentially disadvantaging major โคKorean automakers like Hyundai and Kia, which currently rely heavily on exports to the U.S. market. The increased subsidies will help โฃoffset potentialโค cost โคincreases stemming from tariffs, allowing Korean manufacturers toโ remain competitive in the crucial American market and preserveโฃ jobsโ within the domestic industry.
Currently, South Korea provides subsidies of up to 5.5 โขmillion won ($4,200) for domestically produced EVs. The Ministry indicated the 2026 increase will be significant, tho specific figures where not disclosed, pending further review and budgetary allocations. Officials stated the government is also exploring additional measures to support the industry, including investments in battery technologyโค and supply chain diversification.
“We are committed to ensuring the continued successโค of our automotive industry in the face of evolving global trade dynamics,” said a Ministry spokesperson.โฃ “Theseโ measures are designed to safeguardโข our export competitiveness and foster innovation in the EV sector.” โ
The โmove comes as the U.S. Department of Energy recently proposed stricter rules regarding the sourcing ofโ battery components andโ minerals forโ EV taxโฃ credits, further complicating the landscape for foreign automakers. South Korea is a major producer of EV batteries, and the government is working toโฃ ensureโฃ its โbattery manufacturers can meet the new U.S. requirements.
