Hyundai Motor asks U.S. for temporary access to Chinese minerals

[Photo by Yonhap]

South Korea’s Hyundai Motor Group and key battery manufacturers have appealed to the U.S. government to allow the use of certain Chinese-made core minerals for battery applications while qualifying for electric vehicle (EV) subsidies under the Inflation Reduction Act (IRA).

According to the U.S. Federal Register on Sunday, Hyundai Motor Group stated in a recent submission to the U.S. government that “it is unrealistic to immediately remove foreign entities of concern (FEOCs) from the battery supply chain for specific core minerals.”

The U.S. government had announced that, to qualify for IRA subsidies, battery components must not be sourced from FEOCs starting this year, and core minerals used in batteries should be free from FEOC sourcing by 2025.

The U.S. government categorizes virtually all Chinese companies as FEOCs in its detailed regulations. Following the implementation of these regulations, the number of vehicle models eligible for EV subsidies in the U.S. dropped from 43 at the end of last year to 19 this year, with Hyundai Motor Group losing subsidy eligibility for all of its models since April last year.

Hyundai Motor said in its submission that “China refined and produced 100 percent of global spherical graphite and 69 percent of synthetic graphite in 2022,” emphasizing the difficulty for other countries to quickly replace China as a supplier.

Korean battery companies, including LG Energy Solution Ltd., Samsung SDI Co., and SK on Co., also submitted opinions through the Korea Battery Industry Association (KBIA) regarding the FEOC detailed guidelines.

All three battery manufacturers proposed a deferment in the application of FEOC regulations for graphite.

The Korean government also requested the introduction of measures for Korean battery manufacturers to effectively adapt to the new regulations, considering their diversification plans of battery supply chains.