France’s recent decision to amend its electric vehicles subsidy policy may pose significant challenges for South Korean car manufacturers. This move follows the U.S. Inflation Reduction Act (IRA), which allocates $369 billion to promote green investments.

Under the proposed French policy, car manufacturers are eligible for tax credits based on the vehicle’s price and fuel efficiency. These credits are further influenced by carbon emissions throughout the supply chain, including those from transportation. This methodology potentially excludes Asian countries, especially South Korea, from these subsidies, thus favoring domestic French and neighboring European manufacturers.