South Korea lifted a 50,000-unit annual cap on US vehicle imports, a move that benefits Tesla and General Motors while drawing criticism from domestic automakers.
Furthermore, vehicles produced in the United States can enter South Korea as long as they meet US safety standards, without having to comply with the country’s domestic regulations.
The decision has drawn criticism from domestic automakers, which struggle to compete with foreign rivals such as Tesla and General Motors.
South Korea is the largest source of vehicles imported into the US, with data from S&P Global Mobility showing that 1.4 million passenger cars and light trucks entered the country in 2024.
In late July, the two countries reached a trade agreement under which the US agreed to lower tariffs on South Korean product imports to 15%, in exchange for the Asian country altering its rules on vehicle imports.
Criticism
The competition cited by automakers in South Korea is not (only) focused on sales, but rather on technology and safety.
Traffic safety rules in the US are less strict than those in South Korea — hence why US President Donald Trump has denounced these regulations as “non-trade barriers.”
Additionally, the two countries have very different types of roads, making US vehicles less suitable for South Korea’s narrow and densely packed streets.
The Korean government has said the impact would be “negligible.”
However, as Tesla expands its presence — introducing the large Cybertruck and its Full-Self Driving (FSD) system — local automakers are increasingly concerned.
In contrast, Hyundai faces strict domestic regulations that slow both testing and commercial rollout of its Highway Driving Pilot assisted driving technology.
While initially planning to integrate the system into flagship models like the Kia EV9, regulatory and certification hurdles have led to delays and effective cancellations of the launch.
Hyundai is now looking into partnering with Chinese companies — including XPeng, reportedly — to further develop its autonomous driving strategy.
Cybertruck Gets FSD
Tesla recently began deliveries of the Cybertruck model in South Korea, about three months after orders were opened.
On the same week, its FSD software rolled out in the country, making it the seventh global market to receive it.
It was initially supported on Model S and Model X vehicles only, as they were produced in the United States and, therefore, are not subject to South Korean regulations.
Because the Model 3 and Model Y sold in Korea are imported from Giga Shanghai, additional regulatory requirements are likely delaying their approval.
It’s still uncertain when FSD will become available for these vehicles.
Tesla rolled out the software on its Cybertruck model this Wednesday.
The company also reported that its FSD system has already accumulated 1 million km (about 621,371 miles) in Korea since its launch late last month.
Notably, only about 2% of Tesla vehicles sold in Korea were using FSD up until now, as the remaining 98% of sales are the two best-selling models, the Model 3 and Model Y.
Last week, Lee So-young, a Democratic Party lawmaker who has been working to secure national support for the autonomous driving sector, shared her experience with Tesla’s FSD.
So-young teased that “once it actually spreads into widespread use, I feel like our daily lives are going to change a lot.”
EV Sales
According to local media outlet Chosun, citing the Ministry of Trade and Industry, EV sales in South Korea reached 207,119 units between January and November, a 52% surge year over year.
These figures not only set a record high for the first eleven months but also exceed the total numbers for all of 2023.
In particular, vehicle registrations by Tesla jumped 95% from a year earlier, with 55,594 vehicles sold so far. These accounted for 38% of this year’s increase in domestic EV sales.
Chinese competitor BYD — which sells both hybrid and fully electric models — registered 4,995 units in 2025 in the first eleven months of the year, while Polestar sales jumped fivefold from 480 to 2,884 EVs.
Local automaker Hyundai Group — with both its main marque and Kia — dominates the market across all powertrains.
EV Subsidies
South Korea aims to have 70% of vehicles on the road be zero-emission by 2035.
In August, the government was already mulling raising incentives on electric vehicle purchases.
By then, and according to local media outlet KBS, the government was “coordinating between ministries so that the purchase subsidy and the internal combustion engine (ICE) transition support can be combined to reach about 4 million won [$2,860]” by next year.
However, the official announcement was only made in November, when it announced it will increase subsidies for EVs by 20% next year.
According to the government, the incentives will help the country’s auto industry cope with risks from US tariffs, despite the agreement reached between the two countries.
Passenger EV subsidies are set to rise from 780 billion won ($538 million) this year to 936 billion won ($645.7 million) in 2026, aiming to boost local demand.
