Over the past decade, more than 9 trillion won ($9 billion) in taxpayer funds have been allocated to Tesla Korea. Despite the support from Korean consumers, the company faces criticism for its low contributions to the domestic economy. Tesla's ability to generate substantial revenue in Korea is attributed to a combination of electric vehicle infrastructure, supply chains, subsidies, and road networks. Experts argue that the company should pay fair rent for its 'intangible rights' to continue its operations in the country.
According to industry sources, from the start of Tesla's sales in Korea in 2017 through the first half of this year, approximately 1.14 trillion won ($1.14 billion) in electric vehicle subsidies have been provided to Tesla customers. This estimate is based on annual figures released by the Ministry of Environment, reflecting the annual sales volume and market share of Tesla vehicles.
Subsidies for Tesla have increased significantly, starting from just 5.4 billion won ($5.4 million) in 2017, rising to 8.8 billion won ($8.8 million) in 2018, and 29.1 billion won ($29.1 million) in 2019. In 2020, after surpassing 10,000 annual sales, the subsidy jumped to 130 billion won ($130 million). The amounts continued to grow, reaching 160.4 billion won ($160.4 million) in 2021, 116.5 billion won ($116.5 million) in 2022, 115.8 billion won ($115.8 million) in 2023, 163.6 billion won ($163.6 million) in 2024, and 227.6 billion won ($227.6 million) in 2025, with 185.2 billion won ($185.2 million) in the first half of 2026.
The substantial increase in subsidies reflects the strong preference of Korean consumers for Tesla. Initially, Tesla entered the market with the Model S, selling only about 300 units in its first year. However, sales surged with support from early adopters, reaching 587 units in 2018, 2,430 in 2019, 11,826 in 2020, 17,828 in 2021, 14,571 in 2022, 15,447 in 2023, 29,750 in 2024, 59,916 in 2025, and 56,139 in 2026.
However, Tesla's operating profit margin remains around 1%, raising concerns. According to Tesla Korea's business report filed with the Financial Supervisory Service, the company's revenue for 2025 was 3.31 trillion won ($3.31 billion), a 94.8% increase from the previous year. Operating profit also rose from 25.9 billion won ($25.9 million) to 49.6 billion won ($49.6 million), a 91.5% increase.
In contrast, the operating profit margin fell slightly from 1.52% in 2024 to 1.5% in 2025. Despite growth in revenue, profitability appears to be declining. Analysts suggest that Tesla Korea may be intentionally inflating its cost of sales to lower profitability metrics.
Tesla Korea imports all its vehicles from the Shanghai Gigafactory, meaning higher import costs directly impact profit margins. The cost of sales for Tesla Korea surged from 1.6 trillion won ($1.6 billion) in 2024 to 3.16 trillion won ($3.16 billion) in 2025, a 97.2% increase, outpacing revenue and operating profit growth rates.
Industry observers liken Tesla's practices to tax avoidance strategies employed by luxury brands like Hermes, Chanel, and Louis Vuitton, as well as foreign corporations like Apple and Netflix. One industry insider noted, "By artificially inflating the cost of sales imported from headquarters, local subsidiaries can reduce profits and evade tax pressures from the government. This results in a lower operating profit margin on accounting books, weakening obligations for taxes, donations, and reinvestments that typically accompany business growth."
Tesla's operating profit margin of around 1% and a cost of sales ratio of 95.5% are considered excessive compared to industry standards. While companies like BMW, Mercedes-Benz, Toyota, and Volvo also have high cost of sales ratios, they typically maintain levels between 80% and 90% due to reinvestments in local service networks and parts ecosystems. For instance, BMW's cost of sales ratio was 93.8% last year, Mercedes-Benz at 92.6%, Volvo Cars Korea at 90%, and Toyota Korea at 80.5%.
Employee welfare at Tesla Korea has also declined annually. According to the business report, employee salaries fell to 17.48 billion won ($17.48 million) last year, a 9.3% decrease from 19.35 billion won ($19.35 million) in 2024. Benefits dropped from 496 million won ($496,000) in 2024 to 158 million won ($158,000) in 2025, a 68.2% decline. During the same period, transportation and training expenses decreased by 33.2% and 48.3%, respectively. Notably, the company has not made any donations in the past decade. Despite this, Tesla Korea initiated overseas dividends in 2024, distributing 37.9 billion won ($37.9 million) in interim dividends to its Dutch subsidiary, exceeding its operating profit of 25.9 billion won ($25.9 million).
One industry expert remarked, "Tesla exhibits a contradictory business model that exploits Korea's environmental burdens and taxes through its limited focus on the 'driving' experience of its vehicles. Given its domestic operations, it is difficult to view Tesla as a success story of an innovative company."
* This article has been translated by AI.
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