Korea cuts EV factory permit timeline from 3 years to 1 year to unlock W7.9tr in investment

The government plans to cut the permitting and environmental review period required to convert Ulsan's internal combustion engine factories to electric vehicle production from more than three years to under one year. It will also open a clean hydrogen power auction market this month, as part of a package of measures designed to unlock 7.9 trillion won ($5.82 billion) in corporate investment that has been on hold.

The government announced the plan Thursday at an emergency economic task force meeting chaired by Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il. Titled the "Field-Centered Corporate Investment and Innovation Support Package (2nd Edition)," it builds on a first package released Aug. 13 and focuses on removing investment bottlenecks and streamlining regulations in advanced industries including green energy and secondary batteries.

The centerpiece is support for an approximately 4 trillion won investment by Ulsan-based automaker H to fully reconstruct its internal combustion engine production lines into a factory centered on autonomous driving electric vehicles. The company has been pursuing a conversion of its Ulsan Plants 1 and 4 between 2027 and 2031, but concerns had been raised that permitting and various impact assessments could take more than three years.

The government plans to launch environmental, traffic and disaster impact assessments simultaneously alongside other permitting procedures and provide advance consulting, so that all administrative steps are completed within one year. To that end, Ulsan city and the automaker will sign an MOU in the second half of this year, and local governments will designate dedicated one-stop support coordinators.

The government will also support an estimated 3 trillion won in investment in clean hydrogen production and power generation facilities. After a competitive bidding announcement for clean hydrogen power was canceled last year, companies have struggled to commit to investment decisions. The government intends to open the auction market this month to clear the backlog of pent-up demand.

The upcoming auction will exclude coal-ammonia co-firing generation and will increase the scoring weight given to contributions to the domestic clean hydrogen ecosystem. Winners are to be selected in the first half of next year, with the specific investment scale to be confirmed after operators are chosen.

The government is also accelerating the development of the Muan National Industrial Complex, a follow-on measure tied to the relocation of the Gwangju military airport to Muan. By applying fast-track national industrial complex designation procedures, the government aims to shorten the permitting and impact assessment timeline by more than one year and bring forward 761.5 billion won in investment.

Safety management exemptions for hazardous materials related to secondary batteries will be extended next year to cover materials, parts and equipment companies, spurring approximately 70.2 billion won in new investment including mass production facilities for next-generation silicon anode materials. The government will also support the move of underwater acoustic sensor specialist I into a bio-convergence industrial technology complex to help it secure factory expansion land, backing roughly 40 billion won in investment.

The government will also shorten the process for introducing new technology that blends LNG into by-product combined-cycle power facilities. By cutting the period for environmental impact assessment amendment consultations from more than three months to under one month, it aims to accelerate approximately 69.7 billion won in fuel cost savings and investment capital recovery.

Regulatory improvements to speed up semiconductor factory expansion are also on the agenda. Next year, the government plans to allow integrated bidding for electrical and telecommunications construction work when installing semiconductor fabs. Under the current system, the two types of work must be bid out separately, making it difficult for general construction companies to oversee the entire project and creating friction in process coordination and maintenance, the government said.

For cylinder cabinets that protect gas containers used in semiconductor manufacturing, multiple units will be able to undergo technical review and change permits in a single batch. The measure addresses delays in putting production equipment into service caused by having to go through a separate permit process each time additional units are installed.

Environmental impact assessment standards for agrivoltaic solar installations will also be eased. Currently, projects covering 7,500 square meters or more in agricultural and forestry zones must undergo a small-scale environmental impact assessment. The government plans to amend the relevant enforcement decree in December to exempt agrivoltaic installations smaller than 20,000 square meters from that requirement.

For build-transfer-operate private investment projects, changes in labor costs resulting from revisions to the weekly working-hours system will be explicitly listed as grounds for adjusting operating costs. The government plans to revise the basic plan for private investment projects and standard implementation agreements in the first quarter of next year to ease the burden on private operators.

Support for advanced industry technology development will also increase. The government's budget proposal for next year includes 5 billion won and 7 billion won, respectively, for securing core process equipment technology for next-generation power semiconductors and building demonstration infrastructure. Some 13.3 billion won has been earmarked for secondary battery technology development for humanoid robots. An additional 100 billion won in state funding is planned for 2027 through 2029 to research and develop the three key weak components in robotics — actuators, sensors and robotic hands.

Joo Hwan-wook, policy coordination director at the Ministry of Economy and Finance, said the government would "carefully monitor the implementation of these measures to ensure they translate into actual investment outcomes." The government also plans to prepare a third corporate investment and innovation support package, with a focus on new industry sectors.