Starting in July 2026, the domestic business contribution of manufacturers and importers will be added as a subsidy requirement alongside vehicle performance.
From July of this year, the electric vehicle subsidy allocation system is undergoing a fundamental shift. Previously, subsidies were granted simply if the automobile's own performance—such as driving range per single charge, battery efficiency, and retail price—met certain criteria.
However, the 'Evaluation Criteria for Selecting Electric Vehicle Distribution Project Operators for 2026' released by the Ministry of Climate, Energy and Environment (hereinafter referred to as the Ministry of Climate) on March 31 changes that premise entirely. No matter how excellent a vehicle's performance may be, it will be fundamentally excluded from receiving subsidies unless the manufacturer or importer selling the vehicle passes a separate evaluation.
Regarding the purpose of this system, the Ministry of Climate stated, "We will evaluate whether project operators contribute to building a sustainable domestic EV ecosystem by assessing the manufacturer and importer's business plan for the current year, technology development, safety and after-sales management capabilities, business sustainability, and contribution to related industries and job creation, and participation in the distribution project will be permitted if they pass." The government's official explanation is, "We plan to prevent in advance situations where operators who only receive subsidies and withdraw from domestic businesses, or cause consumer damage due to poor after-sales management, receive support."
The government's logic is clear. Subsidies funded by taxes should not flow to operators who only reap profits in the domestic market while neglecting after-sales management or continuous investment. However, as the details of the evaluation criteria were unveiled, voices raising fairness issues have been growing louder from both the automotive industry and the political arena.
40 Points for Quantitative, 60 Points for Qualitative: Specifics of the 'Company Evaluation'
The evaluation criteria presented by the Ministry of Climate consist of 40 points for quantitative evaluation and 60 points for qualitative evaluation, totaling 100 points. The quantitative evaluation is divided into three items: business capability, technology development, and after-sales management, while the qualitative evaluation is divided into four items: sustainability, ESG response, industrial contribution, and safety management.
Through this reorganization, items such as domestic job creation effects, continuity of post-responsibility, contribution to the transition of the parts industry, and industry-academia collaboration capabilities have been newly added as evaluation indicators. This means they will evaluate how much an automobile sales company contributes to the growth of the domestic automotive ecosystem.
The charging infrastructure item is also one of the key evaluation elements. Detailed items include content evaluating whether a CCS1 charger has been established. CCS1 is the domestic public EV charging standard method, and some analysis within the industry suggests that certain brands operating their own independent charging infrastructure may receive relatively lower evaluations in this category.
It is also noteworthy that aside from the 40 quantitative points, the qualitative evaluation weight was set at 60 points, which is more than half. A high weight for qualitative evaluation also means that the discretion of the evaluators is correspondingly large. Items such as 'business sustainability', 'ESG response', and 'industrial contribution' have characteristics that are difficult to measure clearly with numbers, so securing consistency and transparency in evaluation is expected to be key to the system's credibility.
If a score of 80 points or higher is not achieved by combining quantitative and qualitative scores out of a total of 100 points, the company is excluded from being eligible for subsidies. There are also differing views on how the evaluation results are applied.
The pointing was raised that the method of entirely excluding those scoring below 80 out of 100 evaluation points is not a 'negative approach' that screens out underperforming, troubled companies, but a 'positive approach' that recognizes only a tiny minority at the top.
Unlike the method of eliminating only under-standard operators, there is concern that because it is a structure where only operators receiving a certain score or higher can enter the subsidy market, it can effectively act as a barrier to entry.
The Spread of Chinese EVs as the Background for the New System
The Ministry of Climate stated that the practical background of this system is not unrelated to the expanded market entry of Chinese electric vehicles. An official from the Ministry of Climate stated, "As electric vehicles produced in China have recently been sold in large numbers domestically, critical public opinion regarding whether the payment of subsidies for them is appropriate was strong," and added, "This evaluation criteria was prepared with the intention of responding to the expansion of Chinese EV sales."
Amid the growing presence of foreign electric vehicles in the domestic market, this is interpreted as a policy judgment by the government that subsidies should be executed in a direction that substantially contributes to the domestic industrial ecosystem. However, since a method directly discriminating against a specific country of origin is difficult to be permitted under the WTO Subsidies Agreement, it appears they chose a method of comprehensively reviewing a company's domestic activities and contributions, much like this evaluation criteria.
Rep. Lee So-young raised questions, asking, "Do criteria such as corporate credit evaluation, a domestic business period of 5 years or more, and domestic R&D investment of 50 billion KRW or more work to the advantage of only specific domestic companies?" This points out that the intention to check Chinese EVs could substantially and broadly affect all brands that are far removed from domestic automakers.
Rep. Lee stated, "The budget for EV distribution policy must not be used in a way like sales subsidies for specific companies." Given that EV subsidies are public financial resources created for the environmental purpose of carbon reduction, if the recipient companies become excessively narrow, issues regarding the consistency between the policy purpose and execution method could be raised.
Policy Debates Drawing Attention from Industry and Consumers
The controversies surrounding this evaluation criteria can be summarized into two main stances.
Proponents argue that subsidies should first go to companies that contribute to strengthening the domestic EV ecosystem. The logic is that making employment, technology development, and after-sales management capabilities requirements is a necessary measure to enhance the public effectiveness of subsidies. Furthermore, it is viewed as having a consumer protection aspect in that it filters out operators in advance who neglect after-sales management or domestic investment after receiving subsidies.
Opponents worry that the design of the evaluation criteria structurally disadvantages certain company types, and as a result, consumers' choices of vehicles could be reduced. Furthermore, from the perspective of global trade norms, the possibility that it could be interpreted as a de facto discriminatory measure against imported brands raises the potential for trade friction.
How to strike a balance between industrial protection and market diversity within the framework of EV distribution policies remains a core task that this system must resolve.
Implementation Schedule and Future Outlook
According to current plans, the release of evaluation criteria was completed in March, and the execution of evaluations and announcement of results are to be wrapped up by June. Afterwards, the new criteria will be fully applied starting July 1. While establishing the subscription to 'electric vehicle fire safety insurance' as a safety-related subsidy support requirement, content requiring local governments to allocate local funding to at least 30% compared to national funding is also scheduled to be implemented simultaneously.
However, it remains unclear whether the criteria will be implemented as planned. The likelihood of the evaluation criteria itself being invalidated or modified has grown, and the Ministry of Climate has stated that it is aware that concerns are being raised not only by consumers but also at the National Assembly level. As criticism from the political circles and industry continues, the possibility of modifying detailed items or postponing implementation cannot be completely ruled out.
The electric vehicle market itself continues its growth trend. The domestic EV market is showing an expanding trend after passing through a demand stagnation period from 2023 to 2024 and achieving approximately 220,000 units in 2025, the highest annual distribution volume. Because new entry requirements are being introduced at a time when this market recovery is clear, there is high interest in what kind of impact this evaluation criterion will have on market dynamism.