Starting July 1, 2026, a significant shift will hit South Korea’s electric vehicle (EV) market: BYD, China’s largest EV manufacturer, will no longer be eligible for government purchase subsidies for its passenger electric cars. The move follows the company’s failure to meet new government evaluation criteria, a change that’s sending ripples through the industry and raising questions about the future of foreign automakers in Korea’s rapidly evolving EV landscape.
The announcement came on June 30, 2026, when the Ministry of Climate, Energy and Environment revealed the results of its first-ever 'Electric Vehicle Supply Project Performer Selection Evaluation.' According to Economist and Yonhap News, 35 automakers and importers participated in the evaluation, but only 27 made the cut. Among passenger car manufacturers, just ten—including Hyundai, Kia, Tesla Korea, BMW Korea, and Mercedes-Benz Korea—were selected. BYD, despite its aggressive push into the Korean market and recent high-profile appearances at events like the 2026 Busan Mobility Show, was the only passenger car maker to fall short.
So, what changed? For years, Korea’s EV subsidy program focused primarily on vehicle performance, with both domestic and foreign brands enjoying support. But this year, the government overhauled the system, aiming to ensure that taxpayer-funded subsidies foster a sustainable domestic EV ecosystem. The new evaluation, introduced for the first time in 2026, scored companies across five areas: technology development capability (10 points), supply chain contribution (40 points), environmental policy response (15 points), after-sales management and sustainability (20 points), and safety management (15 points). To qualify for subsidies, companies had to score at least 60 out of 100 points.
It was the supply chain contribution category—the single biggest chunk of the scorecard—that proved decisive for BYD. This segment emphasized operating domestic production facilities and using local parts, effectively measuring how much a company boosts Korea’s own EV industry. According to Edaily and Economist, BYD’s relatively low score in this area was the main reason for its exclusion. As a result, starting July 1, anyone buying a new BYD electric car in Korea will miss out on national subsidies, which previously could total several million won (including local government support). However, those who applied for subsidies by June 30 will still benefit under the previous rules.
The government insists that the new system is not intended to target any specific country or company. Rather, officials say, the policy is designed to ensure that public funds support manufacturers who contribute to Korea’s supply chain, after-sales service network, and safety management capabilities. The Ministry stated, "We will continue to improve the system so that government subsidies can effectively contribute to building a sustainable domestic EV ecosystem and expanding public use of electric vehicles." (Yonhap News)
Still, the rollout of the new criteria has not been without controversy. When the standards were first published in March, industry observers and some lawmakers criticized them as unfairly favoring domestic manufacturers and discriminating against foreign firms. The subjective nature of certain evaluation items, particularly those related to supply chain and after-sales contributions, drew sharp scrutiny. In response, the Ministry adjusted the criteria last month, reducing the weight of subjective evaluations and modifying items that were seen as disadvantageous to foreign companies, as reported by Edaily and Economist.
Despite these adjustments, BYD failed to meet the revised threshold. The Ministry had already relaxed the passing score from 80 out of 120 to 60 out of 100, but the Chinese giant still fell short. This left BYD as the only current recipient of EV subsidies to be excluded under the new system, a fact that has not gone unnoticed in the industry.
The list of companies that did pass is a who’s who of the global and local EV scene. Alongside Hyundai and Kia, the selected group includes Renault Korea, Mercedes-Benz Korea, Volvo Korea, BMW Korea, KG Mobility, Tesla Korea, Volkswagen Group Korea, and Polestar Automotive Korea. Nine electric truck companies and eight electric bus companies also made the cut, broadening the impact of the new policy across various vehicle segments (Yonhap News).
For BYD, the timing couldn’t be more awkward. Just days before the government’s announcement, the company unveiled its BYD SEALION 6 DM-i plug-in hybrid model at the 2026 Busan Mobility Show, a major industry event running from June 27 to July 5 with participation from 141 companies across 12 countries (News1). BYD’s active presence at such events underscores its ambitions in the Korean market, but the loss of subsidies could hamper its competitiveness against rivals who retain government support.
The policy shift also introduces a new insurance program: starting July 1, 2026, Korea will launch an 'Electric Vehicle Fire Safety Insurance' scheme. This program will compensate third parties for damages caused by EV fires within 10 years of vehicle registration, covering up to 15 billion won per incident. Notably, the insurance premiums will be jointly paid by the government and EV manufacturers or importers, meaning vehicle owners won’t face any additional costs (Edaily).
Industry watchers are now closely monitoring the fallout. Some see the revised evaluation as a necessary step to protect Korea’s budding EV industry, ensuring that subsidies nurture local jobs, technology, and supply chains. Others worry it could be interpreted as a protectionist move, potentially discouraging foreign investment or sparking trade tensions. The Ministry, for its part, has pledged to review the system after one year and conduct another round of evaluations in the first half of 2027, aiming to refine the rules and respond to market developments.
For Korean consumers, the immediate impact is clear: those eyeing a BYD electric vehicle after July 1 will have to pay full price, while buyers of Hyundai, Kia, Tesla, and other approved brands will still enjoy generous government support. For BYD, the challenge will be to adapt—either by strengthening its local supply chain or finding new ways to compete in a market where government incentives matter more than ever.
As the dust settles, all eyes will be on how the new rules reshape Korea’s EV market and whether they deliver on the government’s promise of a stronger, more self-reliant industry.