Tesla is shaking up the existing landscape of South Korea’s imported car market, and the race to commercialize autonomous driving technology is now in full swing. Last month, Tesla’s Model Y overtook Hyundai’s Grandeur to become the best-selling vehicle in South Korea. This is despite the fact that the Model Y and Model 3 sold in the country are made in China and therefore do not qualify for the Korea-U.S. Free Trade Agreement (FTA) exemption, meaning the Full Self-Driving (FSD) feature cannot be used.
While price promotions certainly contributed to the sales increase, industry analysts suggest that expectations of FSD eventually being unlocked are driving purchases. In fact, consumer interest is so high that 85 cases of unauthorized FSD activation attempts had been detected by the end of April. Lee Sang-soo, an analyst at iM Securities, said, “The way consumers are buying Teslas now resembles how they bought Apple iPhones five to six years ago. A brand image has formed that makes consumers choose Tesla even when the price gap with the Ioniq 5 isn’t significant.”
The momentum Tesla has created is likely to spread across the imported car segment. South Korea’s Ministry of Land, Infrastructure and Transport is pursuing the adoption of the European Driver Control Assistance Systems (DCAS) certification framework. The effort involves incorporating UNECE’s UN R171 regulation into domestic standards, which would permit automated lane changes that have been blocked until now. The government plans to complete the process as early as next year, or within three years at the latest.
Once the gates open, brands waiting in the wings will enter all at once. Mercedes-Benz will launch the Level 2++ “MB.Drive Assist Pro,” built on Nvidia’s autonomous driving platform, in Europe next year. The system allows hands-off driving even in urban environments, and it can be introduced to South Korea as soon as domestic standards are established. BMW also could not bring its highway hands-free technology “Motorway Assistant,” commercialized in Europe late last year, to South Korea due to the absence of domestic regulations. The company has indicated it will move quickly once a legal basis exists. Chinese brands that put autonomous driving front and center are also lining up.
Hyundai Motor Group has begun its own response. Hyundai will equip the facelifted Genesis G90 this year with Level 2+ highway hands-off capability, and by the end of next year it will expand highway autonomous driving (NOA) with next-generation SDV (Software-Defined Vehicle) models. Urban-capable Level 2++ will be applied starting with the Genesis GV90 in 2028. Kia plans to incorporate urban Level 2++ into its “full-stack SDV” in 2029. The group has also built a “data virtuous cycle” system, standardizing sensors with partners like Nvidia to rapidly bring mass-production vehicles to market and using the real-world driving data collected to advance its proprietary end-to-end (E2E) model.
Nevertheless, industry concerns are growing that the longer the commercialization gap persists, the more market share could be ceded to other automakers. Hyundai will first apply Level 2++ to the Genesis GV90, while Mercedes-Benz will do the same for its premium lineup. This means direct competition in the luxury car segment, where group profitability is highest. If legislation is completed next year as announced, the remaining one to two years before Genesis adds urban autonomous driving will be a window of opportunity for imported brands.
Lee said, “In the domestic market, Tesla has been added as a competitor to existing imported car brands, and the burden could be even greater in the U.S., where FSD is already commercialized, or in Europe, where it’s unclear how long each country’s restrictions will last.” He added, “Accelerating the launch timeline is the most fundamental response, but it’s not something you can simply will into happening, and since this is territory that hasn’t been fully experienced yet, there’s actually a possibility of further delays.”
Given that this gap cannot be bridged by corporate development speed alone, some argue that policy support is needed. An industry insider said, “Since it’s difficult for the government to block Tesla or Chinese companies’ autonomous vehicles from entering the market, realistic approaches include offering incentives for purchasing South Korean-made autonomous vehicles or supporting development through regulatory sandboxes.” The insider added, “With structural issues like EV tax credits overlapping, I suspect autonomous driving policy response has been pushed down the priority list within the group. From an investment and business perspective, securing autonomous driving competitiveness is more urgent.”
Meanwhile, as autonomous driving technology advances, personal data protection issues in connected cars are also coming to the fore. As vehicles evolve into smartphone-like devices, the location and driving data they collect has surged, but the consent framework for personal information is still designed around the vehicle owner. Even if the owner has consented to data collection, a driver who is not the owner has effectively not given consent.
A connected car is a vehicle that exchanges data through internet and other network connections. Features include remote control, voice recognition, AI (artificial intelligence) services, and real-time navigation. As cars operate like massive smartphones, they collect and utilize user data. Each automaker maintains its own privacy policy and terms of service to obtain user consent.
The problem arises when the contract holder (vehicle owner) and the actual driver are different people. The owner has consented to personal data collection and use, but the data being collected comes from the actual driver, creating a disconnect. This applies to cases where spouses or family members share the same vehicle, or when valet parking or designated driver services are used.
According to the Ministry of Science and ICT’s “Wireless Communication Service Subscription Status,” the number of vehicle telematics lines reached 11.04 million as of June. This means more than 11 million vehicles are connected to the internet. That represents a 10.1% increase from the same month last year (10.03 million) and a 48.1% jump from June 2023 (7.46 million). Considering that the total number of vehicles registered with the Ministry of Land, Infrastructure and Transport stood at 26.64 million as of May, roughly 40% or more are now connected cars.
Market concerns are focusing on Zeekr, the Chinese EV brand entering the South Korean market starting with the launch of the “Zeekr 7X” in the second half of this year. The company provides comprehensive mobility data—including real-time vehicle location, parking location, driving routes, and mileage of South Korean drivers—to its Chinese headquarters and parent company Geely Group. A Personal Information Protection Commission official, referring to Zeekr Korea’s privacy policy, said, “I question whether this clause actually applies.”
South Korean automakers such as Hyundai, Kia, and Genesis have codified this approach in their privacy policies and terms of service. They acknowledged the reality, stating, “When multiple drivers share the same vehicle and terminal device for services, it is difficult to clearly distinguish whose driving and location information is being collected.” They further noted, “Collected and generated information is estimated based on the driver selected on the terminal device, and if no driver is selected, it is estimated as the information of the registered member.”
Mercedes-Benz has stipulated that when a vehicle is provided to another user, the company must notify them that digital service-related information is being collected and provide deactivation options. There is also an obligation to disconnect third-party accounts or deactivate digital services to prevent misuse by other vehicle users. In such cases, the owner is advised to check whether digital service-related functions are activated before driving.