Hyundai Reeling from Loss of EV Subsidies in U.S.

  • By Kim A-sa

    August 22, 2022 12:39

    Korean automakers are reeling from the loss of U.S. tax credits for electric cars not made in North America. 
    Hyundai had only just promised a US$10.5 billion investment in the U.S. when President Joe Biden visited Korea in May and experienced the Inflation Reduction Act signed by Biden last week as a kick in the teeth.
    The Korea Automobile Manufacturers Association had written to the U.S. Senate on Aug. 10 urging lawmakers to revise the act so Korean EVs still qualify for tax credits. "U.S. EVs [sold] in Korea received W43.7 billion worth of subsidies during the first half of this year, while Korean automakers invested more than $13 billion in the U.S. over the last 30 years to create more than 100,000 jobs in America," it pointed out (US$1=W1,326). 
    Visitors look at Hyundai's all-electric Ioniq 5 at the World IT Show at COEX in Seoul on April 21, 2021. /Yonhap
    But its pleas fell on deaf ears, and Hyundai and affiliate Kia are scurrying to deal with the fallout. Fueled by the popularity of the Ioniq 5 and EV6 they recently accounted for the second highest share of the U.S. EV market. 
    "EVs cost a lot of money to manufacture and subsidies are essential," a source at Hyundai said. "The loss of around W10 million worth of subsidies will considerably weaken our price competitiveness." 
    Korean battery makers, which have also pledged huge investments in the U.S., are equally miffed. 
    Korea's three major battery makers are building a dozen plants in the U.S. in joint ventures with GM and Ford, but they will not be completed until 2025. In the meantime, EVs using their batteries may not be eligible for U.S. tax credits. 
    "Our original sales plans are at risk of being affected fundamentally," a source at a battery maker said. "This will of course become an obstacle to our future investment plans in the U.S."  
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