車Industry Association Urges Including Electric Vehicles When Introducing Domestic Production Promotion Tax System

*This content was translated by AI.

As the sales cliff caused by the suspension of subsidies intensifies in the global electric vehicle market, major advanced countries are turning sharply to policies to reintroduce or expand subsidies. According to a report released by the Korea Automobile Mobility Industry Association (KAMA), global electric vehicle demand, which had slowed down until 2024, has returned to an upward trend since 2025 on the back of strengthening policy support from major countries.

Germany expanded corporate car tax benefits in July 2024 and reintroduced purchase subsidies from January 2026 after sales plunged after early termination of purchase subsidies at the end of 2023. The UK has also been re-implementing subsidies in the form of discounts on purchases since July 2025 as the market slowed after the abolition of subsidies for passenger electric vehicles. China has ended direct purchase subsidies, but it is supporting demand through a "recycling" policy that provides 20,000 yuan for scrapping vehicles along with a 50% reduction in vehicle purchase taxes in 2026.

Japan has been strengthening industrial support by expanding subsidies since 2026 while giving additional benefits to vehicles using eco-friendly steel, while Norway and the Netherlands continue to provide support such as VAT exemptions and automobile tax reductions despite high EV penetration rates. On the other hand, the United States only grew 1% in the aftermath of the abolition of the IRA subsidy, the lowest among major countries, confirming the impact of the subsidy.

As Korea maintained subsidies at the previous year's level and newly established conversion subsidies of up to 1 million won this year, sales surged 167% year-on-year to 41,000 units in January-February 2026. However, due to soaring demand, some local governments are already running out of subsidies, and policy supplements such as securing an additional budget are urgent due to the rapid exhaustion of livelihood electric trucks.

KAMA emphasized that in order to achieve the cumulative supply target of 4.2 million electric vehicles in 2030, special demand-generating policies should be implemented in parallel with the stable maintenance of subsidies. In addition, he urged the early introduction of a "domestic production promotion tax system" that can complement the current purchasing subsidy system to respond to global supply chain reorganization and strengthen the domestic production base.

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*This content was translated by AI.