Korea shifts electric-vehicle aid as it builds battery circulation system

South Korea's electric-vehicle transition is becoming as much about what happens to a battery after a car is sold as about sales at the showroom. Kia's expanding EV volumes are coinciding with a government redesign of purchase support and a plan to link the records, trading and later use of batteries that leave vehicles.

Kia said EV retail sales rose 88.4 percent year on year to 110,000 in the second quarter of 2026, helped by the launch effect of mass-market models.

The Ministry of Finance and Economy said it would move the individual consumption-tax reduction for electric and hydrogen electric-vehicle purchases into budget support under a tax-reform plan. The current reduction is 100 percent, capped at 3 million won for an electric vehicle and 4 million won for a hydrogen electric vehicle. Tax credits exclude people who do not pay income tax and do not fully benefit low-income taxpayers with small tax liabilities. Recipients, support levels and delivery method are to be fixed in the 2027 budget proposal.

The Ministry of Trade, Industry and Energy and the Ministry of Climate, Energy and Environment signed a two-year agreement to connect data systems for distribution and reuse, life-cycle greenhouse-gas assessment and recycling.

Used batteries contain strategic minerals including lithium, nickel and cobalt. Moon Shin-hak, Vice Minister of Trade, Industry and Energy, said building a "robust ecosystem" for used batteries was an "urgent priority".