Tesla claims violation of United States–Korea Free Trade Agreement

Tesla Korea

Tesla has become the electric vehicle (EV) of choice in South Korea, where in September 2020 the automaker accounted for 91% of all EV sales in the country.

With sales continuing to grow, Tesla is calling on the South Korean government to change its low-emission car expansion plan, saying it is discriminatory and violates the United States–Korea Free Trade Agreement (KORUS FTA).

The plan, which was implemented this year, is intended to grow the number of low-emission cars produced by auto manufacturers. Similar to having to meet emissions standards in other parts of the world, the South Korean government will impose fines on automakers that fail to reach the green car manufacturing targets outlined in the plan.

On the other hand, if automakers meet or exceed those targets, they receive incentives. Those incentives are tradeable, meaning they could add as much as $30 million to Tesla’s bottom line based on current sales volumes.

Also Read: Tesla launching new CCS charging adapter in Korea next year

The problem is the plan is only applied to automakers that sold at least 4,500 cars in 2009. Tesla sold 937 Roadsters that year.

According to the government, the plan is not discriminatory and the 4,500 unit threshold came about through negotiations between the two countries.

 ““It was not introduced to discriminate against domestic and foreign companies. The U.S. government requested exceptions for smaller sellers such as Cadillac and its demarcation was 4,500 units,” the government explained.

It is unknown at this time if changes will be made to include Tesla. According to local media reports, trade experts are predicting it will be difficult for the South Korean government to not make concessions to allow Tesla into the plan, fearing a trade dispute between the two countries.

Sources: Naver & Business Korea

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