South Korea has reduced the financial incentives available to buyers of the Tesla Model Y. The South Korean government’s decision to cut the subsidy for the Model Y is part of a broader strategy to adjust its support for electric vehicles (EVs), particularly those utilizing batteries manufactured in China.
The Environment Ministry of South Korea announced on Tuesday that the subsidy for the Model Y would be set at 1.95 million won (C$1975/US$1,460) for 2024, down significantly from the 5.14 million won (C$5,200/US$3,850) that was available last year. This adjustment in available subsidies comes amidst Tesla cut the price of the Model Y last year by 2 million won, bringing it down to 54.99 million won, in order for it to meet the government’s criteria for full subsidy eligibility. (via Korea Daily)
Under the new guidelines, the Korean government also lowered the price cap for EVs eligible for full subsidies from 57 million won to 55 million won. Additionally, like in the US, the government has introduced stricter criteria for battery technology, effectively excluding vehicles equipped with lithium iron phosphate (LFP) batteries, predominantly produced in China, from receiving the full subsidy unless they meet a higher energy density threshold of over 500 watt hours per kilogram (Wh/kg).
The reduction in subsidy for the Model Y, which had emerged as the top-selling imported EV in Korea last year with 13,885 units sold, opens up a potential advantage for local manufacturers like Hyundai and Kia. The Hyundai Ioniq 6, for example, qualifies for a government subsidy of 6.9 million won (C$6,990/US$5,171), the highest among EVs in the Korean market. Similarly, the Kia EV6 is set to receive a subsidy of 6.84 million won (C$6,931/US$5,126), highlighting the government’s support for domestic EV makers over foreign brands that rely on Chinese battery technology.
Tesla currently only offers the Model Y Rear-Wheel Drive (RWD) in South Korea, built at Giga Shanghai, with the Long Range and Performance variants greyed out and not available for purchase on the online configurator.
Editor’s note: The article was updated to correct the reference to Wh/kg, not Watts.
