SEOUL (Reuters) -South Korea’s government said on Friday it would boost subsidies for electric vehicles (EVs) by 20% next year as part of a package to help the country’s auto industry weather risks caused by U.S. tariffs.
The government said in a statement passenger EV subsidies would be increased to 936 billion won ($658.47 million) in 2026, up from 780 billion won this year, in a bid to stimulate local demand.
The package will also include support to help auto parts suppliers, with the government pledging to supply policy finance at levels above the 15 trillion won it provided in 2025.
South Korea will also strengthen guarantee programmes for auto parts makers operating overseas, such as in the United States and Mexico, to offer long-term, low-interest loans.
The Asian country’s auto industry shipped exports worth $70.8 billion in 2024, accounting for more than 10% of the country’s $683.8 billion in total exports.
Hyundai Motor, which together with its affiliate Kia Corp is the world’s third-biggest automaking group by sales, has been hit by a 25% tariff for exports to the United States, its biggest market generating about 40% of revenue.
That tariff rate was lowered to 15% after Washington and Seoul reached a trade agreement last month.
However, the 15% rate has not been applied to South Korean autos and parts makers as the countries have yet to issue a joint fact sheet outlining the agreement on trade and security issues struck last month.
More than two weeks after U.S. President Donald Trump and South Korea’s Lee Jae Myung announced they had resolved months of negotiations over tariffs and security matters, the two sides have yet to release any written agreement.
South Korean Foreign Minister Cho Hyun asked U.S. Secretary of State Marco Rubio to work for the swift release of a joint fact sheet on the sidelines of a meeting of G7 foreign ministers in Canada, the Yonhap News Agency reported on Thursday.
($1 = 1,421.4800 won)
(Reporting by Heekyong YangEditing by Ed Davies)
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