[News] Hyundai Faces Challenges in Obtaining Electric Vehicle Tax Credits in the United States

Negotiations between Hyundai Motor and the U.S. government concerning tax incentives for the Korean automaker’s USD 5.5 billion EV plant in Georgia have yet to reach a conclusion.

It was first reported on August 31st 2023, indicating that Hyundai Motor Group and LG Energy Solution (LGES) would invest an additional USD 2 billion in their battery cell manufacturing joint venture (JV) at the Metaplant in Bryan County, Georgia.

The company subsequently aimed to expedite the construction of its factory in Georgia and establish partnerships with local battery suppliers to align with the Inflation Reduction Act (IRA), as stated by Hyundai’s CFO Seo Gang-Hyun during an earnings call.

In an latter interview, Georgia Governor Brian Kemp expressed concerns that the IRA is adversely affecting Korean companies. Korea Joongang Daily further noted that no Korean electric vehicles, including those from Hyundai Motor and Kia, are currently listed for the IRA tax credit. According to TrendForce’s analyst, the market share in 2023 for Hyundai Motor and Kia combined is 10.6%, which ranks as 4th in the US market, behind GM, Toyota, and Ford.

Currently, the U.S. Energy Department has reportedly yet provided a definitive response to Hyundai’s request for a 30 percent tax credit under the IRA, as per a report from the Korean media outlet Korea Joongang Daily. As reported by The Korea Daily, the potential value of these incentives could be around USD 350 million.

“We’ve been constantly discussing with the U.S. government for the incentives,” Hyundai Motor confirmed regarding the news. “Nothing has been decided, and we’re waiting for the result.” Still, reportedly, Hyundai and Kia have not announced any cuts to EV production or investment.

TrendForce notes that the automotive industry is currently facing high raw material and labor costs, as well as significant investments in electrification and autonomous driving. Balancing the protection of local enterprises, maintaining competitiveness, and managing consumer costs is an urgent task for governments worldwide. Most countries are focusing on the country of origin rather than the brand of vehicles in their restrictive measures.

Measures taken by the US—specifically for EVs—include requiring that EVs and their batteries be assembled in North America. Furthermore, critical minerals in the batteries must originate from countries that have signed free trade agreements with the US to qualify for subsidies totaling US$7,500.

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(Photo credit: Hyundai)

Please note that this article cites information from Korea Joongang Daily and The Korea Daily.

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