South Korea injects $14 bil to revitalize 'green' vehicle, battery industries

South Korea plans to invest at least Won 21 trillion ($14.4 billion) over 2025 to revitalize its domestic eco-friendly vehicle and battery industries and boost their competitiveness, the Ministry of Trade, Industry and Energy said Jan. 15.

Dubbed as "measures to strengthen competitiveness of eco-friendly vehicles and secondary batteries," the investment is directed at achieving four goals, namely addressing a slowdown in demand, develop cutting-edge technology, strengthen the secondary battery eco-system and respond to external uncertainties.

The largest slice of the 2025 investment, about Won 7.9 trillion, will be allocated to the secondary battery industry, a 31.7% increase from Won 6 trillion worth of funding in 2024.

The funds allocated will include tax breaks to stabilize "the supply chain of core minerals for secondary batteries," the ministry said.

South Korea also plans to designate certain core mineral manufacturing and processing technologies for batteries as national strategic technologies, apply preferential tax credit rates for research and development as well as investment tax credits.

"It may have a positive impact on the Korean EV market but hard to say it will boost the market at this moment," a South Korean source said.

To counter the slowdown in the EV industry which the ministry described as a "chasm", South Korea plans to increase subsidies on electric vehicles, extend highway tolls for eco-friendly vehicles until 2027 and add about 4,400 fast-charging units nationwide.

"There sure will be some impact as to the subsidies to new EV buyers and so forth but not too significantly," another source said.

To promote the use of hydrogen-powered vehicles, the number of refueling stations will be increased to 119 in 2027 from 56 currently. The ministry said it will raise hydrogen fuel subsidies and extend natural gas tariff reduction measures for hydrogen raw materials.

For cutting-edge technology, about Won 5.1 trillion will be allocated to commercialize level 4 autonomous driving and future vehicle industries such as software-defined vehicles.

Typically, for level 4, a vehicle can handle the majority of driving situations independently but requires the presence of a driver.

South Korea will set aside Won 8 trillion to improve the domestic automobile parts sector, of which about Won 430 billion will be earmarked to develop core EV parts such as batteries and motors.

To cope with external uncertainties, South Korea will discuss free trade agreement with countries such as Malaysia and Thailand "to expand our entry base into emerging markets and support the integration of component companies into overseas supply chains through matching support with overseas automakers," the ministry said.

Platts, part of S&P Global Commodity Insights, assessed battery-grade lithium carbonate at $10,000/mt CIF North Asia on Jan. 14, flat day on day while lithium hydroxide was assessed at $9,700/mt CIF North Asia, up $100/mt from Jan. 13.