Tesla is running into some issues in Korea. After the automaker dominated the country’s EV market last quarter, the government is now considering cutting Tesla out by increasing the price threshold for its generous electric car incentives.

As we previously reported, the Korean market was really helpful to Tesla during a difficult second quarter amid the global pandemic.

 Tesla delivered over 4,000 Model 3 vehicles in Korea during the second quarter, and the automaker reportedly still has a backlog of 4,000 to 5,000 Model 3 vehicles on order.

The strong demand is partly due to Tesla buyers having strong EV incentives that significantly reduce the price of the electric cars.

However, Tesla had so much demand that it reportedly accounted for almost half of the near $200 million in incentives the country issued during the first half of the year.

Now, they are now reportedly thinking about changing the regulations to avoid having Tesla buyers receiving the bulk of it (via the Korea Herald):

The Ministry of Environment is poised to revise the current calculation system for EV subsidies by October after discussions with municipalities, related experts and concerning associations. High-end EV brands are expected to be removed after consultations, as Tesla alone devoured 43% of total 209.2 billion won ($176 million) of subsidies in the first half of this year.

Today, the ministry will hold a meeting with 11 automakers, including the country’s Kia and Hyundai, to discuss the issue.

Electrek’s Take

Interestingly, Tesla buyers were actually left out of the program early due to a weird rule regarding charging time that unfairly put Tesla to a disadvantage.

They later changed the rule, giving Tesla buyers access to the incentives, but now it looks like they might take it back.

To be fair, it’s not uncommon for EV incentives to come with a price threshold, but they are normally set in place to avoid giving subsidies to people buying luxury vehicles.

In this case, it looks like it would be triggered by Tesla’s success, and if they want to avoid giving too much incentives to Tesla, they would have to set the threshold especially to exclude Tesla’s vehicle lineup.

We will have to wait and see, but it is not looking good. Kia and Hyundai have a lot of power in Korea and they don’t have luxury EVs yet, and therefore, they have an incentive to keep the threshold as low as possible.

We will try to keep an eye on the situation.

FTC: We use income earning auto affiliate links. More.


Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.

You’re reading Electrek— experts who break news about Tesla, electric vehicles, and green energy, day after day. Be sure to check out our homepage for all the latest news, and follow Electrek on Twitter, Facebook, and LinkedIn to stay in the loop. Don’t know where to start? Check out our YouTube channel for the latest reviews.

About the Author