South Korea is considering reallocating part of its hydrogen mobility budget to support electric vehicle (EV) purchase incentives as demand for battery-electric vehicles continues to outpace expectations.
According to local media reports, the government is reviewing whether funding currently allocated to hydrogen vehicles and hydrogen refuelling infrastructure could be redirected to the country’s EV subsidy programme, which may run out of funding as early as August.
EV Demand Exceeds Expectations
South Korea allocated 1.7454 trillion won (approximately €1 billion) for battery-electric vehicle subsidies in 2026.
However, stronger-than-expected demand has placed pressure on the programme. The Ministry of Trade, Industry and Energy reported that sales of battery-electric vehicles reached 162,026 units during the first five months of the year, an increase of 125.3% compared with the same period last year.
Local reports attributed part of the increase in demand to higher fuel prices.
Climate Minister Kim Seong-hwan indicated that the government is considering measures to maintain consumer access to EV incentives.
“From a people-centered perspective, regardless of how much budget is allocated, it is right to allow consumers to buy as many vehicles as they want.”
Hydrogen and Infrastructure Budgets Under Review
According to the reports, the government is examining several funding programmes that could provide additional resources for EV subsidies.
These include the annual budget for hydrogen-powered vehicle incentives, valued at 576.2 billion won, funding for electric vehicle charging infrastructure totalling 451.75 billion won, and 174.3 billion won allocated for hydrogen refuelling station development.
No final decision has been announced regarding whether any of these budgets will be reallocated.
Local Government Funding Also Required
Any increase in the national EV subsidy programme would also require additional funding from local governments.
South Korea’s EV incentive scheme is jointly financed by central and municipal governments, meaning local authorities must provide matching funds alongside national subsidies.
An official from the Ministry of Environment said the government is working with local administrations to secure additional funding through a supplementary budget after newly elected local government leaders take office.
“We are seeking cooperation to make up for the shortfall in local funds through a supplementary budget next month, when new local government heads begin their terms.”
Current Incentive Programme
South Korea currently offers purchase incentives ranging from approximately 5.3 million to 5.8 million won for eligible battery-electric passenger vehicles, depending on vehicle size.
Eligible models include domestic vehicles such as the Hyundai Ioniq 6 and Kia EV3, as well as imported models including the Tesla Model 3, Tesla Model Y, BYD Dolphin and BYD Seal.
The government has also recently discussed possible changes to eligibility rules for imported electric vehicles, although no policy changes have been confirmed.
The proposed budget review reflects South Korea’s efforts to respond to rapidly growing demand for battery-electric vehicles while balancing support across multiple zero-emission transportation technologies.