Korea slashes subsidy for Tesla Model Y by two-thirds

The logo of Tesla is seen in Taipei, Taiwan [REUTERS/YONHAP]

The subsidy for Tesla Model Y in Korea fell by two-thirds as the government’s new EV credit plan snubs cars with cheaper Chinese batteries.

The government set its subsidy for the Tesla Model Y at 1.95 million won ($1,460) this year, down 62 percent from last year’s 5.14 million won, according to the Environment Ministry on Tuesday.

The move comes despite Tesla cutting the price of the Model Y, equipped with Shanghai-made cheap batteries, by 2 million won to 54.99 million won to qualify for the government’s full subsidy.

The Korean government revised the rule this year to offer full subsidies to EVs with a sticker price below 55 million won, down from 57 million won last year.

The government also slashed subsidies for vehicles with lithium iron phosphate (LFP) batteries made in China. Only EVs with batteries with more than 500 watts per hour of energy density qualify for the full subsidy.

LFP batteries cost less but generally have lower energy density at 400 watts per hour.

Tesla released the Model Y for the Korean market with a price tag of around 20 million last year. It sold 13,885 Shanghai-made Model Ys in Korea last year alone, making it the No. 1 imported EV in Korea in terms of sales.

The subsidy slash for Tesla will likely benefit Hyundai Motor, as its Ioniq 6 will receive a subsidy of 6.9 million won this year — tops for EVs available in the Korean market so far.

Kia’s EV6 receives a subsidy of 6.84 million won from the government.

BY SARAH CHEA [chea.sarah@joongang.co.kr]