More than 1 trillion won in taxpayer money has been allocated to Tesla Korea over the past decade. Despite the support and popularity among Korean consumers, the company faces criticism for its low contribution 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 suggest that Tesla must pay fair rent for its 'intangible rights' to continue its operations in the country.
According to industry sources, from the start of Tesla's domestic sales in 2017 through the first half of this year, approximately 1.1424 trillion won 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.
The subsidies for Tesla have increased significantly, starting from just 5.4 billion won in 2017, rising to 8.8 billion won in 2018, and 29.1 billion won in 2019. After surpassing 10,000 units sold in 2020, the subsidies jumped to 130 billion won. The amounts continued to grow, reaching 160.4 billion won in 2021, 116.5 billion won in 2022, 115.8 billion won in 2023, 163.6 billion won in 2024, and 227.6 billion won in 2025, with 185.2 billion won allocated in the first half of 2026.
The substantial increase in subsidies indicates the strong preference of Korean consumers for Tesla. Initially entering the market with the Model S, Tesla sold only about 300 units in its first year. However, with support from early adopters, sales surged to 587 units in 2018, 2,430 units in 2019, 11,826 units in 2020, 17,828 units in 2021, 14,571 units in 2022, 15,447 units in 2023, 29,750 units in 2024, 59,916 units in 2025, and 56,139 units in 2026.
However, Tesla Korea's operating profit margin remains around 1%, raising concerns. According to a recent business report filed with the Financial Supervisory Service, Tesla Korea's revenue for 2025 was 3.3066 trillion won, a 94.8% increase from the previous year. During the same period, operating profit rose from 25.9 billion won to 49.6 billion won, a 91.5% increase.
In contrast, the operating profit margin fell from 1.52% in 2024 to 1.5% last year, a decline of 0.02 percentage points. This suggests that despite growth in revenue, profitability is decreasing. Analysts believe this may be due to Tesla Korea 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 increased from 1.5999 trillion won in 2024 to 3.1553 trillion won in 2025, a 97.2% rise, outpacing revenue and operating profit growth rates.
Industry observers liken Tesla's practices to tax avoidance strategies used by luxury brands like Hermes, Chanel, and Louis Vuitton, as well as foreign corporations like Apple and Netflix. An industry insider noted, "By artificially inflating the cost of sales from headquarters, the Korean entity can reduce profits and evade tax pressures, 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 notably low compared to the industry average. While companies like BMW, Mercedes-Benz, Toyota, and Volvo also have high cost of sales ratios, they typically maintain levels around 80-90% due to reinvestments in local service networks and parts ecosystems. For instance, BMW's cost of sales ratio last year was 93.8%, 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 were 17.48 billion won last year, down 9.3% from 19.346 billion won in 2024. Benefits dropped significantly from 496 million won in 2024 to 158 million won in 2025, a 68.2% decrease. During the same period, transportation and training expenses fell by 33.2% and 48.3%, respectively. Additionally, donations have remained at zero for the past decade. Despite this, Tesla Korea initiated overseas dividends in 2024, distributing 37.9 billion won in interim dividends to its Dutch subsidiary, exceeding its operating profit of 25.9 billion won.
An 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. It is difficult to view the company's domestic growth as a success story for an innovative enterprise."
* This article has been translated by AI.
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