Report

South Korea electric vehicle market is projected to observe a CAGR of 28.49% during the forecast period 2024-2031, rising from USD 8.55 billion in 2023 to USD 63.52 billion in 2031. The market has experienced significant growth in recent years and is expected to maintain growth in the forecast years due to advancement and innovation in technology, a rising shift of consumers towards electric vehicles, an increase in per capita income, and the rapid introduction of hybrid and battery electric vehicles. In addition, the government of South Korea has promptly introduced new regulations and policies to encourage the production and sales of electric vehicles in South Korea and across the globe, driving demand for electric vehicles in South Korea. For instance, by 2030 South Korean government has set a target of supplying 4.5 million electric vehicles, accelerating the expansion of charging infrastructure, hydrogen, and electric vehicles, coupled with the promotion of scrapping of internal combustion engine vehicles. Furthermore, the government offers subsidies and incentives for purchasing and developing electric vehicles to foster the adoption of electric vehicles in different industries.
Companies are contributing significantly to reducing carbon emissions by launching new and advanced electric vehicles and spreading awareness concerning the benefits of electric vehicles. Manufacturers in the electric vehicles market are developing electric vehicles with advanced features and innovative technology, and developing advanced battery technologies, propelling the South Korea electric vehicle market growth. For instance, in April 2024, Hyundai Motor Group of South Korea announced plans to launch its first electric vehicles made in India by 2025. As the parent company of Hyundai and Kia brands, Hyundai focuses on reinforcing its presence in the emerging market, which Tata Motors presently lead.
Rapid Customer Demand and Advanced Technology Driving the South Korea Electric Vehicle Market Growth
In South Korea, the growing demand for electric vehicles from consumers and different sectors is anticipated to raise the South Korea electric vehicle market demand. Additionally, the advancement in electric vehicle technology and integration of enhanced features and technology including fast charging capabilities and long driving ranges, propel the market growth in South Korea. The significant increase in raising awareness concerning air pollution and a growing requirement for eco-friendly transportation options attract innovative features and easy accessibility of electric vehicles, boasting the electric vehicles' adoption. Key participants in the market are planning to launch new and advanced electric vehicles with top-notch technological features and sustainable qualities to expand their footprint and product portfolio.
For instance, in June 2024, BYD Company Ltd. announced the launch of its first electric cars in South Korea to provide customers with a more premium experience than mainstream local EV brands, including Kia and Hyundai.
Establishment of EV Charging Infrastructure Drives the South Korea Electric Vehicle Market Growth
In South Korea, the government plans to establish EV charging infrastructure and offer support to charging station operators, driving the demand for electric vehicles in South Korea. For instance, in December 2023, the South Korean Government focused on propelling domestic EV chargers, targeting a 10% global market share by 2030. The government announced measures to encourage the EV charging infrastructure and support charging station operators. South Korean government focuses on the advancement of EV technology in the EV charging market in the coming years, including wireless charging, ultra-fast charging, intelligent charging, charging robots, and cybersecurity software for charging stations. Companies in the electric vehicle market across South Korea are collaborating to promote electric vehicles sales and expand charging infrastructure.
For instance, in June 2024, Kanematsu Corporation signed a memorandum of understanding with South Korea's EVAR Inc. to promote the sales and expansion of EVAR EV chargers actively and jointly in global and Japanese markets.
Government Policies Drive the South Korea Market Growth
In South Korea, the government and consumers believe that electric vehicles are an essential choice for implementing sustainable transportation modes owing to greenhouse gas emissions. South Korean government has made different efforts to implement the transition from internal combustion engine vehicles to electric vehicles within the forecast period. The government is organizing necessary policies to make electric vehicles more accessible, sustainable, affordable, and comfortable for individuals. In addition, the South Korean government is proposing to offer subsidies and operational cost subsidies on the purchase of electric vehicles. For instance, in 2020, incentives of up to USD 15,700 were implemented to purchase electric vehicles.
Also, the government intends to surge the quantity of subsidized electric vehicles by 34%, touching 215,000 cars during 2023, up from 160,000 units during 2022. Simultaneously, the average subsidy per vehicle will be lowered to USD 5014.97 (KRW 6.8 million) from the previous USD 5162.05 (KRW 7 million).
Passenger Vehicles Dominate the Largest South Korea Electric Vehicle Market Share
Passenger vehicles hold the largest share of South Korea market, propelled by increasing per capita income and surged demand for electric vehicles, the easy availability of passenger cars, and the rapid development of EV charging infrastructure. The evolution of EVs in South Korea is rising, owing to the presence of key players and the implementation of favorable government policies. These companies are significantly funding the improved functionality of electric vehicles and developing innovative and advanced EV batteries. Furthermore, key market participants are planning to collaborate to expand their presence and address the rising requirement for electric vehicle components and electric vehicles in South Korea, hence fostering the growth of the South Korea passenger vehicle market in the forecast period.
For instance, in April 2024, Sterling Tools Limited signed a Memorandum of Understanding with South Korea's Yongin Electronics Co., Ltd to advance the production of electric vehicles and electronic components in India.
Battery is Projected to Hold the Largest Share in the South Korea EV Market
The growth of battery segment is attributed to the demand for battery-powered electric vehicles, which are highly portable and offer efficient high-temperature performance and durability. Electric vehicle batteries are produced and designed to be high-power, affordable, compatible, safe, reliable, and recyclable, fostering the requirement for batteries in the South Korea market in the forecast period. Major players are aiming at different research and development companies to decrease costs, extend battery life, address rising safety concerns about fault issues, and decrease cobalt usage. Lithium-ion batteries are estimated to be considerably integrated into EVs owing to their long lifespan, high energy effectiveness, low self-discharge, and high power-to-weight ratio. The government is planning to fund lithium-ion battery recycling to address the rising demand for electric vehicles.
For instance, in December 2023, South Korea announced an investment of USD 29 billion to help its battery companies to reduce foreign dependence and strengthen battery industry.
Future Market Scenario (2024 - 2031F)
- A significant rise in income levels and an increase in urbanization are key drivers of South Korea electric vehicle market growth in the forecast period.
- The South Korea government has been implementing strict emission control rules to surge commercial and passenger electric vehicles on roads, estimated to accelerate the demand for electric vehicles in South Korea.
- The increasing fuel prices, a surge in favorable government initiatives, and expansion of electric vehicle producers into South Korea electric vehicles market.
- In South Korea, a large segment of the population is shifting toward a sustainable mode of transportation propelling the demand for electric vehicles.
Key Players Landscape and Outlook
Companies in South Korea are planning to invest in different electric vehicle manufacturing facilities to produce electric vehicles with advanced technologies and integration of enhanced sensors. Key participants are efficiently conducting several research and development activities to enhance the functioning and compatibility of electric vehicles. Companies are introducing different EV battery technologies to expand the life of electric vehicles and offer an overall better driving experience. Also, companies are adopting different strategies, including partnerships, collaborations, new product launches, mergers and acquisitions, and others, to expand their product portfolio and footprint.
In March 2024, Mercedes-Benz Korea Ltd. announced to expand its luxury electric vehicle product line across Korea in 2024. The initiative by Mercedes-Benz Korea Ltd. aims to offer the best price to customers and provide the best consumer experience of brands.