Hyundai Motor’s Chung meets U.S. official on IRA and Korean EV sales

Executive Chairman Euisun Chung [Source : Hyundai Motor Group]

Hyundai Motor Group Executive Chairman Euisun Chung met with the U.S. State Department’s Jose Fernandez, Under Secretary for economic growth, energy, and the environment, on Tuesday to discuss the impact of the Inflation Reduction Act (IRA), in particular concerning the law’s “final assembly in North America” requirement for electric vehicles.

During the meeting in Seoul, Chairman Chung put an emphasis on a flexible application of the law, particularly for companies that have made investments in the U.S., according to sources.

Under the law, which took effect in the U.S. in August, EVs that meet the “final assembly in North America” criteria are subject to a tax credit of up to $7,500 per vehicle. None of the EVs sold by Hyundai and Kia Corp. in the U.S. market qualify for the credit, as they are made in Korea. Due to this, the Korean carmakers have low EV sale forecasts in the U.S. this year.

Hyundai Motor Group is planning to build an EV plant in Georgia, which will have capacity to make 300,000 EVs a year. But the plant’s first product won’t roll out until 2025, building a two- to three-year gap without Hyundai being able to enjoy the tax benefit. Hyundai Motor Group has set itself the goal of grabbing 12 percent of the global EV market share by 2030. That would tally to 3,230,000 EVs sold worldwide, including 840,000 EVs in the U.S. by 2030.

There is some leeway for Korean EVs in the U.S. market. EVs that are sold for leases and rental cars are eligible for the tax credits whether or not they are finally assembled in the U.S., according to new guidance from the U.S. Department of the Treasury. Hyundai now plans to expand its EV sales goal in this sector, to 30 percent, with reasonable lease price-setting. Formerly, lease sales at the carmaker accounted for only three to five percent.

Fernandez wrote on his official Twitter feed that, “[w]elcomed meeting with @Hyundai Korea to advance our sustainable economic vision for global electronic vehicle (#EV) battery supply chain resilience, critical for U.S.-ROK #energysecurity.”