[Business Diplomacy] Lessons from IRA: Hyundai Motor bolsters government relations in US
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This article is the fifth installment in a series of interviews and analyses on how South Korean corporations can sharpen their diplomatic capabilities to brighten their prospects for overseas growth in this mega-election year around the world. -- Ed.
Hyundai Motor Group has been exerting all-out efforts into strengthening its government relations capabilities in the United States after the Korean auto conglomerate got caught off-guard by the impact of the Joe Biden administration’s Inflation Reduction Act.
The IRA, which was signed into law in August 2022, promptly put Hyundai’s three-headed auto Cerberus -- Hyundai Motor Co., Kia and Genesis -- at a disadvantage as the legislation favored eco-friendly cars such as electric vehicles and plug-in hybrid vehicles manufactured with American-sided sourcing of battery components and critical minerals and finally assembled in the US, giving up to $7,500 in tax credits to vehicles meeting the requirements.
Despite the sudden blow to its EV expansion drive in the US, Hyundai Motor fared well as it shifted gears to ramp up the lease option, which remained a way to get government subsidies. According to the Korea Automobile and Mobility Association, the Korean automaker sold a total of 48,838 passenger EVs in the US between January and May this year, accounting for a record-high share of 11.2 percent in the market. It marked a significant improvement from last year’s figure of 29,622 EVs sold, which took up only 6.8 percent of the market during the same period.
To better weather the geopolitical uncertainties in the US, one of the most prominent auto markets in the world, Hyundai Motor decided to bulk up its global policy unit.
In July last year, the automaker first recruited Kim Il-bum, a former presidential protocol secretary, to lead its global policy office newly set up under the group’s strategic planning division. He previously served as President Yoon Suk Yeol’s assistant for the foreign press when Yoon was president-elect.
Kim’s diplomatic resume includes being the director of the North American division at the Ministry of Foreign Affairs, the first secretary at the South Korean Embassy in Washington and the first secretary of the country's permanent mission to the United Nations. He was also the official interpreter for three former presidents: Kim Dae-jung, Roh Moo-hyun and Lee Myung-bak.
Hyundai Motor brought in Sung Kim, a former US ambassador to South Korea, as an adviser for the auto giant’s global business to boost diplomatic capabilities in December last year. He joined the Foreign Service at the US State Department in 1988 and held the ambassador post in South Korea from 2011 to 2014, in the Philippines from 2016 to 2020 and in Indonesia from 2020 to 2023. He also served as the US assistant secretary of state for East Asian and Pacific affairs and US special representative for North Korea.
The American diplomat was publicly seen on the side of Hyundai Motor Group Executive Chair Chung Euisun at the CES in Las Vegas in January this year.
The Korean automaker continued to beef up its global affairs unit as it upgraded the global policy office to a separate body in February this year and announced the hiring of Woo Jung-yeop, a former director general for strategy at the Ministry of Foreign Affairs. Woo served as an adviser on international diplomacy and national security during President Yoon's campaign, a senior research fellow specializing in the US maneuvers at the Sejong Institute and a research fellow at the Asan Institute for Policy Studies.
According to Hyundai Motor’s first-quarter report published in May, the global policy office consists of two units -- a global policy strategy team and a global policy operation team. Executive Vice President Kim Il-bum, the former presidential protocol secretary, leads the global policy office while Woo, a senior vice president, is the head of the global policy strategy team.
The global policy strategy team also has two more executives: Kim Dong-jo, a former foreign press spokesperson for the presidential office with experience at the Ministry of Foreign Affairs, and Chang Jae-ryang, a former director for multilateral trade cooperation at the Ministry of Trade, Industry and Energy.
"In the US context, Hyundai would benefit from insights on the implications of a second Biden administration’s China policies, as well as which of Trump’s proposals to undo the Inflation Reduction Act and place higher tariffs on goods entering the United States," said Troy Stangarone, senior director and fellow at the Korea Economic Institute of America.
"Trump’s policies, especially, could have significant implications for Hyundai’s investments in EV production in the United States. However, as we’ve seen with Europe’s reactions to the Inflation Reduction Act and Chinese EV subsidies, it is also important for Hyundai to have advisers who can provide insight into how the policies of the US and China will likely impact their operations in third countries."
According to OpenSecrets, a Washington-based nonpartisan organization that tracks lobbying in US politics, Hyundai Motor Group spent $9.46 million in US lobbying activities from 2021 to 2023, trailing only Samsung Group among Korean interests.
By Kan Hyeong-woo(hwkan@heraldcorp.com)
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