Korea’s autonomous vehicle future will depend less on engineering progress than on whether the Ministry of Land, Infrastructure and Transport and the National Assembly reform the mobility market in advance. The government has sustained its goal of commercializing Level 4 autonomous driving or autonomous vehicle in defined settings by 2027 and has expanded testing zones and regulatory frameworks. Yet these efforts still operate within a passenger transport regime that prioritizes control of market entry control and protection of legacy taxi interests. Without structural reform, Korea risks importing advanced vehicle technology within a closed market design.

The core of the constraints are legal and institutional. Under Article 49-3 of the Passenger Transport Service Act, platform transport operators must obtain permission from the land ministry. The framework introduced after the 2020 legislative revision led to a discretionary approval system in which regulators assess business plans based on transport demand, service characteristics, and expected impacts on existing taxi supply. The system also requires a minimum fleet size, typically around 30 vehicles, under the Enforcement Decree. Entry is therefore managed case by case rather than through transparent eligibility rules, producing a tightly controlled approval environment instead of a broadly competitive one.

This structure reflects the political economy of Korea’s taxi market. As of July 2024, Seoul had 71,686 taxi licenses, including 49,083 personal taxi licenses, meaning personal taxis accounted for about 68 percent of the city’s fleet. Nationally, Korea recorded 248,913 licensed taxis in 2023, including 164,670 personal taxis, so individually operated vehicles still made up roughly two-thirds of the total. The sector is also aging rapidly. Seoul data show the average age of personal taxi drivers was 64.6, and drivers aged 65 or older accounted for 50.3 percent of all drivers.

These conditions make reform a politically sensitive issue. In Korea, taxi licenses are treated as financial assets and are actively traded. In Seoul, the average transaction price for a personal taxi license reached 106.23 million won as of July 2024. Oversupply has long been recognized as a structural issue. The national taxi total-volume control system was introduced in 2004 to stabilize supply levels, but once licenses gained financial value and political visibility, large-scale reductions became difficult. As a result, reforms affecting ride-hailing platforms or future robotaxi fleets are often interpreted not simply as regulatory changes but as interventions affecting household asset values.

This political dynamic has shaped Korea’s response to mobility innovation. Uber’s early operations faced legal action in 2014 for violating transport law. Tada, which relied on a legal exemption for chauffeur-driven rental vans, was effectively shut down after parliament revised the law in March 2020 to restrict the model. In both cases, policy did not adapt to incorporate new services into a broader competitive framework. Instead, regulatory adjustments reinforced the taxi-centered structure.

The implications for autonomous mobility are direct. Early robotaxi fleets will require significant capital investment, creating strong incentives to maximize vehicle utilization. However, urban transport demand fluctuates sharply during peak commuting periods and major events. Systems built around tightly controlled fleet supply struggle to respond efficiently to such variations. In most successful markets, this gap is addressed through flexible ride-hailing and ride-sharing supply. Korea’s regulatory structure limits that flexibility even before robotaxis are deployed.

A more effective strategy would separate transition policy from market entry restrictions. Korea already has a legal basis for doing so. Article 49-5 of the Passenger Transport Service Act requires platform operators to pay contributions intended to stabilize the passenger transport market, and the law allows these funds to be used to reduce taxi numbers and improve working conditions.

In addition, Korea operates voluntary fleet reduction programs in which local governments compensate drivers who retire licenses. Recent municipal programs have offered buyback payments of roughly 95 million to 110 million won per license. The problem is not the absence of a transition mechanism but its limited scale. Restrictive entry rules have prevented contribution-based funding from expanding enough to support meaningful structural adjustment.

Other jurisdictions have paired market opening with structured transition support. In New South Wales, booking service providers must pay a passenger service levy per trip to fund industry restructuring. In Massachusetts, rideshare companies contribute a per-trip assessment that supports the modernization of taxi and livery services. Korea does not need to replicate these models exactly, but the underlying principle is clear: Governments can compensate incumbents during transition without freezing market structure.

Responsibility for reform therefore lies with both the land ministry and national assembly. Policymakers should expand legal room for platform-based mobility services and shift from discretionary entry controls toward rules grounded in safety, insurance, and operational standards. At the same time, the existing contribution mechanism should be scaled into a transparent transition fund linked directly to voluntary license retirement and industry restructuring. Finally, regulators should clarify that autonomous mobility services will be licensed based on operational performance and safety certification, consistent with Korea’s national commercialization roadmap. Without reform, Korea risks importing autonomous technology into a legacy taxi structure, effectively turning robotaxis into another protected taxi category. Before it can lead in autonomous mobility, Korea must allow mobility markets to function.

Source: Korea Times News