August 30, 2022 13:24
A Korean delegation made an urgent trip to the U.S. on Monday to plead with the government there to reconsider slashing subsidies for electric cars made outside North America.
The Inflation Reduction Act regulations signed by U.S. President Joe Biden last week scraps tax credits for EVs manufactured abroad and phases out subsidies for EV batteries made with raw materials from China.
According to the Ministry of Trade, Industry and Energy on Monday, senior officials from the ministries of industry, finance and foreign affairs led by Vice Industry Minister Ahn Sung-il will visit the Office of the U.S. Trade Representative, the Treasury Department, the Commerce Department, and Congress in Washington until Wednesday to relay Korean industries’ concerns about the Act.
The law is devastating news for Korean carmakers as well as battery makers who have already pledged to build factories in the U.S. but will not be ready for a couple of years.
The delegation will also meet with executives of Korean auto and battery companies in the U.S. to find ways to support them.
Next month, Trade Minister Ahn Duk-geun and Industry Minister Lee Chang-yang will also fly to Washington to discuss the issue with U.S. officials.
The Act stipulates that tax credits are given only to EVs assembled in the U.S., Canada and Mexico. Naturally, Hyundai's Ioniq 5 and Kia's EV6, which are exported to the U.S. from Korea, are excluded from subsidies.
"Hyundai won't be able to start operating its EV plant in the U.S. until 2025 at the earliest," an auto industry insider said. "They'll have to sell their EVs in the U.S. without the benefit of tax credits for more than two years unless there's a change in the situation."
Tax credits amount to up to US$7,500 per EV, so losing them will deprive Korean EVs of their price competitiveness in the world’s largest auto market.
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