Korean battery stocks drop nearly 10% as Trump moves to eliminate EV tax credit

Stocks of Korea's major battery makers slumped nearly 10 percent following reports that U.S. President-elect Donald Trump plans to eliminate the EV tax credit.

Tesla Cybertruck EV in New York [REUTERS/YONHAP]

Stocks of Korea's major battery makers slumped nearly 10 percent following reports that U.S. President-elect Donald Trump plans to eliminate the EV tax credit.

LG Energy Solution, Samsung SDI and SK Innovation all closed lower on Friday.

LG Energy Solution took the biggest hit, falling 12.09 percent to 371,000 won ($265), followed by Samsung SDI with a 6.81 percent decrease to 216,500 won and SK Innovation, which dropped 6.43 percent to 96,100 won.

Reuters reported Thursday that Trump’s transition team is planning to eliminate the maximum $7,500 tax credit for EV purchases, a provision of the Inflation Reduction Act (IRA).

This move is part of the incoming administration’s broader tax reform agenda, according to the report. The president-elect has been outspoken against the current administration's push for EVs, referring to it as an "EV mandate."

The IRA EV tax credits require the final assembly of the vehicle to be completed in North America and set a Manufacturer's Suggested Retail Price (MSRP) limit of $55,000 or less for passenger vehicles and $80,000 or less for SUVs, vans and pickup trucks.

Currently, 15 EVs are eligible for the tax credit, with none produced by Hyundai Motor Group.

Hyundai Motor Group had been expected to benefit from the IRA tax credit with EVs produced at its new Georgia plant. The battery-making firms have also announced plans to build factories in the United States.

The Ministry of Trade, Industry and Energy released a statement Friday, saying that the abolishment of the EV tax credit is "yet to be confirmed." The ministry also sought to reassure the industry, adding that the IRA's tax reduction on investment and production in battery and renewable energy was not mentioned in the Reuters report.

Hyundai Motor shares rose by 2.23 percent to 206,000 won, while Kia shares fell by 0.97 percent to 91,600 won.

BY CHO YONG-JUN [cho.yongjun1@joongang.co.kr]