South Korea’s electric vehicle (EV) market is expected to grow at a CAGR of 28.49% from 2024 to 2031, expanding from USD 8.55 billion in 2023 to USD 63.52 billion by 2031. This growth is driven by technological advancements, increasing consumer preference for EVs, rising per capita income, and the rapid introduction of hybrid and battery-electric vehicles. Additionally, the South Korean government has introduced policies and regulations to boost EV production and sales domestically and internationally. By 2030, the government aims to deploy 4.5 million EVs while expanding charging infrastructure and promoting the transition away from internal combustion engine vehicles. Incentives and subsidies further encourage EV adoption across various industries.
Automakers are actively contributing to emission reduction by introducing advanced EV models and raising awareness about their benefits. Companies are enhancing battery technology and integrating cutting-edge features, driving the expansion of South Korea’s EV market. For instance, in April 2024, Hyundai Motor Group announced plans to launch its first India-manufactured EVs by 2025, strengthening its market presence in emerging economies currently led by Tata Motors.
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Rising Consumer Demand and Technological Advancements Driving Market Growth
The increasing demand for EVs from consumers and various industries, along with advancements in EV technology, is fueling market expansion in South Korea. Features such as fast charging, extended driving ranges, and improved accessibility are making EVs more attractive. Growing awareness of air pollution and the need for sustainable transportation solutions is further accelerating adoption. Market leaders are continuously innovating by introducing high-tech, eco-friendly EVs to expand their product offerings.
For example, in June 2024, BYD Company Ltd. launched its first electric vehicles in South Korea, aiming to provide a premium alternative to established local brands such as Kia and Hyundai.
Expansion of EV Charging Infrastructure Driving Growth
The South Korean government is investing heavily in EV charging infrastructure and supporting charging station operators to facilitate EV adoption. In December 2023, the government announced plans to capture a 10% global market share in EV charging solutions by 2030. Investments focus on advancing EV charging technology, including wireless and ultra-fast charging, intelligent systems, charging robots, and cybersecurity for charging stations. Collaboration among companies is further promoting EV sales and charging infrastructure expansion.
For instance, in June 2024, Kanematsu Corporation signed a memorandum of understanding with South Korea’s EVAR Inc. to jointly expand EVAR’s charging technology in global and Japanese markets.
Government Policies Driving Market Growth
The South Korean government considers EVs a crucial part of its sustainable transportation strategy to reduce greenhouse gas emissions. Efforts to transition from internal combustion engine vehicles to EVs include policy changes aimed at making EVs more accessible, affordable, and convenient. Subsidies and incentives continue to support EV adoption. For example, in 2020, incentives of up to USD 15,700 were introduced to encourage EV purchases.
Additionally, the number of subsidized EVs increased by 34% in 2023 to 215,000 units, up from 160,000 in 2022. At the same time, the average subsidy per vehicle was adjusted to USD 5,014.97 (KRW 6.8 million) from USD 5,162.05 (KRW 7 million).
Passenger Vehicles Leading Market Share
Passenger EVs dominate the South Korean market due to rising income levels, growing consumer demand, increased availability, and the expansion of charging infrastructure. The presence of major players and government support further boost market growth. Automakers are investing heavily in enhancing EV functionality and developing innovative battery technologies. Industry leaders are also forming partnerships to expand production and meet the increasing demand for EVs and components.
For instance, in April 2024, Sterling Tools Limited signed an agreement with South Korea’s Yongin Electronics Co., Ltd. to strengthen EV and component production in India.
Batteries Expected to Hold the Largest Market Share
The battery segment is a key driver of the EV market due to the demand for efficient, portable, and durable battery-powered vehicles. EV batteries are designed for high performance, affordability, safety, and recyclability, fueling demand in South Korea. Companies are focusing on R&D to enhance battery life, lower costs, improve safety, and reduce reliance on cobalt. Lithium-ion batteries, known for their long lifespan, high energy efficiency, and superior power-to-weight ratio, are expected to dominate the market.
In December 2023, South Korea announced a USD 29 billion investment to support its battery industry, aiming to reduce reliance on foreign suppliers and strengthen domestic production.
Future Market Outlook (2024-2031)
- Income Growth and Urbanization: Rising income levels and urbanization will further drive EV adoption.
- Emission Regulations: The government’s strict emission policies will increase the presence of commercial and passenger EVs on roads, accelerating demand.
- Government Incentives and Market Expansion: Rising fuel prices, supportive government policies, and the expansion of EV manufacturers in South Korea will boost the market.
- Sustainable Transportation Shift: A growing number of consumers are switching to environmentally friendly transport, propelling EV demand.
Report Scope
The “South Korea Electric Vehicle Market Assessment, Opportunities, and Forecast, 2017-2031F” by Markets and Data provides a detailed analysis of the South Korean EV industry, covering market size, segmental trends, growth opportunities, and forecasts. It also profiles key players, highlighting their market share, business strategies, and competitive landscape.
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