Tesla price cuts set to spur EV competition in South Korea

SEOUL, January 02 (AJP) - Tesla’s decision to cut prices on key electric-vehicle models in South Korea is expected to intensify competition in the country’s EV market, as expanded government subsidies and the growing presence of imported brands put pressure on domestic automakers.

The U.S. firm has discounted the Model 3 Performance all-wheel-drive version by up to 9 million won ($760), lowering its price below 60 million won, the threshold for eligibility for South Korea’s EV purchase subsidies.

The move comes as Seoul strengthens policy support for electric vehicles and as Chinese manufacturers prepare to enter the market with lower-priced models.

Under the government’s revised 2026 EV purchase subsidy plan released on Jan. 1, buyers who scrap or sell gasoline-powered or other internal-combustion vehicles and then purchase an EV will be eligible for up to 1 million won in additional subsidies starting this year.

The measure broadens support as South Korea works toward its 2035 national greenhouse gas reduction target under its nationally determined contribution (NDC), though per-vehicle subsidy amounts remain unchanged from last year.

Industry officials expect competition between domestic and imported brands to intensify under the expanded incentives, with around 20 new EV models scheduled to launch in South Korea this year.

Imported brands have steadily increased their market share. According to the Korea Automobile Importers & Distributors Association, new EV registrations in South Korea totaled about 207,000 units from January through November last year. Imported vehicles accounted for 84,045 units, or 40.6 percent of the market, up from 25 percent in 2022 and 29.2 percent in 2023.

Tesla remains one of the dominant players. Led by the Model Y, the company sold 55,594 vehicles in South Korea from January through November last year, ranking second behind Kia, which sold 59,939 units. Model Y sales reached 46,927 units, the highest of any EV model sold in the country.

Chinese automakers are also expanding their presence. BYD, which ranked third in South Korea’s imported EV market in its first year, has signaled plans to launch the compact electric SUV Dolphin, which it said could be priced in the 20 million won range after subsidies. Following Zeekr’s market entry last year, Xpeng is also expected to enter the South Korean market this year.

Domestic automakers are responding with new models. Hyundai Motor plans to launch the Genesis flagship electric GV90, while Kia is preparing to introduce new electrified vehicles, including GT versions of the EV3, EV4 and EV5.

“The EV market will see very fierce competition this year as imported brands move into South Korea to strengthen global competitiveness,” said Kim Pil-soo, a professor of future mobility at Daelim University College.

Hyundai and Kia “have no choice but to roll out proven models” to defend their home market against foreign rivals competing aggressively on price, he said.