US battery electric vehicle (BEV) manufacturer Tesla Inc has come under fire in South Korea after its local subsidiary, Tesla Korea, hiked its prices on the same day that its vehicles became eligible for newly introduced BEV incentives offered by the South Korean government.

On 1 July, South Korea introduced a new points-based BEV subsidy evaluation system, moving away from a purely range-and-efficiency-based system. The new system takes into account vehicle manufacturers’ overall technological capabilities, contributions to the country’s supply chain, compliance with domestic environmental regulations, safety management, and minimum standards for after-sales services.

Under the new programme, qualifying BEV manufacturers are eligible for subsidies of up to KRW 7.5 million (US$ 4,950) per vehicle, including national and regional/city incentives. Tesla vehicles are understood to be eligible for subsidies of up to a total of KRW 4 million, depending on the model and specification. While a total of 27 vehicle manufacturers qualified for the new subsidies, BYD was notably excluded from the programme.

On the same day that the new subsidies were introduced, Tesla hiked its prices by an estimated 7% overall, with the price of its long-range Model 3 rising by KRW 7 million to KRW 60 million. Price hikes on most other models ranged between KRW 3 million and KRW 5 million.

Tesla’s decision to raise prices on the same day it qualified for the new incentives triggered calls for the government to introduce tougher safeguards to prevent automakers from exploiting taxpayer-funded incentives to boost profits while undermining the purpose of the incentives –helping to lower prices and boost demand for zero-emission vehicles.

Tesla Korea said its price hikes were in response to the weaker Korean won and rising raw material costs. The company has become the leading vehicle import brand in South Korea with sales surging fourfold to 45,020 units in the first five months of 2026.