Subsidies for electric vehicles (EVs) are being used up much faster than expected in South Korea, as rising demand driven by price cuts and higher oil prices pushes sales sharply higher, according to the Korea Automobile & Mobility Association, Korea JoongAng Daily reported.
Although applications for local subsidies opened only in early February, funds for passenger EVs have already been exhausted in 45 out of 160 municipalities. Subsidies for commercial EVs have run out in 54 areas.
Even where funds remain, they are close to being fully used. Around 90 percent of passenger EV subsidies have been allocated in 60 municipalities, while electric truck subsidies have reached similar levels in 67 areas.
The rapid depletion comes amid a strong recovery in EV demand. Sales reached 83,000 units in the first three months of the year, a rise of over 150 percent compared to the same period last year. After slowing in 2023 and 2024, the market rebounded in 2025, with total sales increasing by 50.1 percent to 220,000 units.
Industry officials say the surge is being driven by lower vehicle prices and rising fuel costs. Carmakers such as Kia, Volvo and Tesla have reduced prices, while BYD has added pressure with more affordable models.
At the same time, higher global oil prices, partly due to disruptions around the Strait of Hormuz—a key route for about 70 percent of South Korea’s oil imports—have made EVs more appealing to buyers.
Kim Kyung-yu of the Korea Institute for Industrial Economics and Trade said that as of April 2, subsidy applications had already reached 71.3 percent of the allocated volume for passenger EVs and 85.6 percent for commercial EVs. He noted that additional funding would be needed to ensure rising demand translates into actual purchases.
Consumer groups have also raised concerns about uneven access to subsidies across regions. Lim Ki-sang said shortages at the municipal level could lead to differences in support for buyers, calling for steps to ensure fair access nationwide.
