A Hyundai Motor Ioniq 6 electric sedan. Photo courtesy of Hyundai Motor
Aug. 4 (Asia Today) -- South Korean automakers are warning that electric vehicles face a double setback under the government's latest tax reform plan as Chinese brands intensify their push into the domestic market.
Electric vehicles were excluded from a new domestic production tax credit widely described as South Korea's version of the U.S. Inflation Reduction Act. The government also plans to gradually reduce individual consumption tax exemptions for electric and hydrogen-powered vehicles before eliminating them in 2029.
Industry officials said the combination could weaken South Korea's electric vehicle sector as lower-priced Chinese models gain market share.
The Ministry of Finance and Economy said the tax reform plan announced Monday would apply the domestic production credit to six strategic fields: solar power, wind power, secondary batteries, semiconductors, critical materials and artificial intelligence and robotics components. The government had previously presented the credit as a measure to strengthen domestic production and supply-chain resilience.
