EV subsidies benefit China bus makers most. Lee wants to change that.

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EV subsidies benefit China bus makers most. Lee wants to change that.

Published: 16 Sep. 2025, 14:24

Audio report: written by reporters, read by AI

President Lee Jae Myung speaks during a press conference at the Blue House in central Seoul on Sept. 11. [JOINT PRESS CORPS]

President Lee Jae Myung’s criticism of subsidies for Chinese electric buses has put renewed focus on whether Korea should give larger subsidies to Korean EV makers to protect the local industry, though experts say such a policy would be difficult to enforce and could backfire.

At a Sept. 11 press conference marking his first 100 days in office, Lee said subsidies had unfairly benefited Chinese bus makers.

“If the country provides subsidies to promote the EV industry, Korean automakers should receive the benefits,” Lee said. “Instead, Chinese companies took the subsidies and swallowed the domestic market. The president should have adjusted the policy to favor domestic firms,” noting that billions of dollars in subsidies over the years have only supported Chinese automakers.

Lee made similar comments at a Cabinet meeting on June 10, saying subsidy policy “should be redirected to protect domestic industry.”

The remarks reflect the rapid expansion of Chinese electric buses in the Korean market. Foreign electric buses accounted for 37.8 percent of new sales in 2021 but rose to 54.6 percent in 2023, according to the Korea Automobile & Mobility Association. Sales of Chinese-made buses, at 1,499 units, exceeded Korean-made sales of 1,246 units last year. Almost all imported buses are from China.

Subsidy standards changed in 2024 to prioritize driving range and energy density, reducing support for foreign models. Their market share has since declined, but as of June this year, foreign electric buses still made up 40.5 percent of total registration, compared to 59.5 percent for Korean models. When Chinese buses were first introduced in 2017, only 25 units were registered, meaning the figure has grown nearly 200-fold.

Visitors tour Woojin Industrial Systems’ self-driving electric bus at the autonomous driving exhibition hall in Goyang, Gyeonggi, on April 4. [YONHAP]

Price competitiveness has been a key factor. Chinese electric buses typically cost about 70 percent of Korean models.

BYD’s eBus 11, a 49-seat city bus, sells for about 250 million won ($179,000), compared to Hyundai Motor’s Elec City, a 52-seat bus priced at about 350 million won. Before the 2024 subsidy change, both received similar subsidy amounts, keeping the roughly 100 million won price gap intact.

“Chinese firms initially pushed with low prices and actively marketed to local governments, which helped them expand their market share quickly,” said Kwon Yong-joo, a professor in the automotive and transportation design department at Kookmin University.

Concerns extend to passenger vehicles as well. BYD launched sales of EVs in Korea in January, and Geely Holding's premium EV brand Zeekr is expected to enter the market later this year.

Like their bus counterparts, Chinese automakers are pursuing aggressive pricing strategies. BYD priced its Atto 3 small SUV at 31.5 million won and its Sealion 7 midsize SUV at 44.9 million won, both 5 million to 10 million won lower than comparable Korean models.

The photo shows an electric vehicle charging station in Seoul on Aug. 29. [NEWS1]

"Chinese brands could gradually eat into the Korean EV market the same way they did with buses, which is why differentiated subsidies are being discussed,” said Lee Ho-geun, professor of future automotive studies at Daedeok University.

But analysts warn that such measures carry risks. If subsidies are cut for Chinese brands, Beijing could claim discrimination and retaliate with tariffs or other economic measures.

Since subsidies are classified as nontariff barriers, any policy changes could also affect ongoing trade talks with the United States. Legislative discussions on a bill to promote domestic production of strategic industries through tax incentives have already stalled in the National Assembly.

"Subsidies can sometimes reduce incentives for Korean firms to innovate and strengthen competitiveness, so policymakers should be cautious," said Cho Cheol, a senior researcher at the Korea Institute for Industrial Economics & Trade. “What matters more is helping Korean automakers produce high-quality EVs."

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM HYO-SEONG [[email protected]]