South Korea's EV Demand Surges, But Chinese Imports Lead Growth

Electric vehicle demand in South Korea rebounded strongly in the first half of 2024, with new registrations soaring by 113.6% year-on-year to 198,509 units. EVs now represent 23.3% of the new car market, up from 11.1% in the same period last year. This surge outpaced the slight decline in hybrid vehicle registrations, making EVs the primary driver of eco-friendly car market growth.

The Korea Automobile Mobility Industry Association (KAMA) attributed the EV resurgence to a combination of factors, including new government subsidies, early disbursement of local government incentives, high fuel prices, and the expansion of affordable EV models. However, KAMA also cautioned that the rapid depletion of local government subsidies could lead to a slowdown in demand in the second half of the year.

A significant trend accompanying the EV boom is the disproportionate growth of imported vehicles, especially those from China. Imported EV registrations increased by 151.9% to 84,463 units, far exceeding the 92.0% growth for domestic EVs. Chinese-made EVs, including models from Tesla produced in Shanghai, BYD, and Polestar, saw a dramatic 178.7% increase, capturing 35.0% of the EV market share.

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The rapid influx of Chinese electric vehicles has positive aspects such as expanding adoption through price reduction and broadening consumer choice, but it is also increasing pressure on the domestic manufacturing base and supply chain competition.

This influx of Chinese EVs has reshaped the broader imported car market. Overall imported car registrations rose 30.0% to 192,703 units. Chinese-manufactured imports accounted for 41.2% of this market, surpassing German brands for the first time. KAMA's senior committee member Kwon Gyeong noted that while Chinese EVs offer benefits like lower prices and expanded consumer choice, they also intensify competitive pressure on South Korea's domestic manufacturing base. He urged for support measures to enhance the competitiveness of local EVs and protect the domestic automotive ecosystem.

Adding to industry concerns, the government's 2026 tax reform plan excluded EVs from domestic production tax credits, which are designed to incentivize local manufacturing of strategic industries. KAMA Chairman Jeong Dae-jin emphasized the urgent need for EVs to be included in these tax incentives to bolster domestic production infrastructure and competitiveness against the accelerating wave of Chinese EVs. He also stressed the importance of securing additional local government subsidies for the second half of the year to sustain demand.

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The domestic automotive industry's manufacturing base and supply chain competitiveness are facing serious threats due to the accelerating onslaught of Chinese electric vehicles in both the global and domestic markets.