South Korea's EV sector splits into two realities, but aluminum consumption remains unshaken

In 2024, South Korea exported 2.78 million vehicles, most of them headed to the US, according to the Korea Automobile Manufacturers Association (KAMA). In 2025, the momentum faltered as the steep US duties dragged down export volumes lower. Meanwhile, the country's EV production stood at 407,009 units, accounting for 11 per cent of total automobile production, with an increased sales figure Y-o-Y. The question now is whether the domestic market's strength can meaningfully offset the shock from declining overseas demand.

Strong domestic market

As per the data shown by the International Trade Administration, the South Korean EV market is estimated to grow by 20 per cent of all vehicle sales combined by the end of 2025, creating opportunities for EV manufacturing in the US, including the charging infrastructure, advanced safety systems and battery technology. In the domestic market, South Korea's sales of BEVs, HEVs and other EVs, in the first half of 2025, reached 319,249 units. The number exceeded 300,000 units for the first time, accounting for 40 per cent of the total automobile sales. 

By 2031, South Korea's EV market is projected to see a CAGR of 28.49 per cent, reaching USD 63.52 billion. By 2030, the South Korean government is looking at supplying a total of 4.5 million EVs, by accelerating the charging infrastructure, besides subsidies and other incentives. 

South Korea's EV exports 

Despite robust domestic trends, South Korea's export story is dominated by the fallout from the US 25 per cent tariffs. Exports to the US, which is the largest market, have decreased by 30 per cent due to tariffs, resulting in a decline in the overall exports. In October 2025, South Korea's overall automobile exports fell by 10.5 per cent to USD 5.55 billion in comparison to October 2024. Exports alone to the US fell by 29 per cent from October last year. 

The setback in South Korea's automobile exports started in April 2025 after a sharp decline in the US shipments, due to the tariff implications for India, which has been a prominent player in the global EV and automobile industry, rapidly increasing its market volatility, aiding in reshaping its position in the shifting trade dynamics with a looming cautionary tale.  

Yet not all markets are weakening. South Korea's automobile exports to the European Union have significantly risen by 26.7 per cent. The change in the demand from the EU is mainly due to the strong demand for EVs from Kia and Hyundai's Casper electric. 

According to Hyundai.com, South Korea aims to increase the EV exports from 2.18 million units in 2024 to 2.47 million units by 2030. However, the increase in the exports of EVs will rise due to strong demand from Europe and Asia. 

Tariff negotiations, a sign of optimism

South Korea is now pushing to ease the tariff burden as negotiations are underway with the United States to lower the duty from 25 per cent to 15 per cent, aligned with the arrangement negotiated between the US and Japan. If finalised, the reduced tariff will take effect from the first of the month in which the agreement is concluded.

To reach an agreement, South Korea has agreed upon removing 50 a 50,000-unit cap on the US-manufactured vehicles, which complies with the federal motor vehicle safety standards, indicating an entry not requiring any further modifications. 

The framework for a deal was shaped during recent talks between President Lee Jae-myung and Donald Trump, but a formal announcement is still pending.

Strengthening the domestic market through subsidies and investments

In a statement, the government of South Korea has stated that it will increase the subsidies to KRW 936 billion (USD 658.47 million) in 2026, up from KRW 780 billion (USD 531 million) for the passenger EV, to stimulate the local demand. As part of the package, the government is further looking to extend its support to the suppliers of the auto parts with a supply policy framework concerning the levels which are above KRW 15 trillion (USD 10.19 billion) provided in 2025. 

In addition to this, the country is guaranteeing programmes for the overseas auto part makers, likely in the US and Mexico, by offering them low-interest loans for a long term.

Between 2026 and 2030, the Hyundai Motor Group will be investing a total of USD 86.47 billion in the South Korean automobile sector after the agreement emerged between President Trump and President Lee concerning the tariff reduction from 25 per cent to 15 per cent. 

What may fall, aluminum consumption grows

Whether the domestic market accelerates or exports rebound, one constant in South Korea's EV landscape is the steady rise in aluminum demand. AL Circle research estimates, 709,000tonnes of aluminum to be consumed by South Korea's transportation sector versus 689 thousand tonnes of aluminum consumed in 2024.