Hyundai Motor Sends President Gong Young-woon to the U.S. in a Hurry: The Reason Behind It

Discussion with Political and Government Officials on Inflation Reduction Act Response
Meeting with Dealer Companies Also Held

In April of this year, when Hyundai Motor's Ioniq 5 was selected as the World Car of the Year in New York, USA, Jang Jae-hoon, President of Hyundai Motor (from the left), Lee Sang-yup, Vice President of Hyundai Motor, and Luke Donckerwolke, Vice President, are taking a commemorative photo.

[Asia Economy Reporter Choi Daeyeol] Gong Young-woon, President of Hyundai Motor Group, departed for a business trip to the United States on the 23rd. This move is interpreted as the group’s management taking active measures in response to the recently implemented Inflation Reduction Act (IRA).

According to the company and industry sources, President Gong is scheduled to visit Washington D.C. and meet with local political and government officials during this trip. Arrangements are also underway for meetings with dealers in the U.S. Gong is responsible for Hyundai Motor Group’s strategic planning and oversees domestic and international government relations.

The urgent dispatch of President Gong to the U.S. is seen as the group’s recognition of the pressing need to respond to the IRA. Since the act took effect immediately after being signed by President Joe Biden, all eco-friendly vehicles sold by Hyundai and Kia in the U.S. are currently ineligible for tax credit benefits. The IRA is a law aimed at addressing climate change and fiscal deficit issues, providing up to $7,500 (approximately 10 million KRW) in tax credits only for electric vehicles that are finally assembled in North America. Hyundai and Kia’s eco-friendly vehicles sold in the U.S. are all produced domestically in Korea and exported to the local market.

Gong Young-woon, President of Hyundai Motor Group / Goyang = Photo by Hyunmin Kim kimhyun81@

Hyundai plans to produce some eco-friendly models at local factories and build a dedicated electric vehicle plant, but for now, they cannot receive tax benefits. This means Hyundai and Kia’s electric vehicles are roughly 10 million KRW more expensive compared to locally produced electric vehicles. Hyundai had plans to convert some equipment at its Alabama plant to start producing the Santa Fe Hybrid and Genesis GV70 electric vehicles as early as the end of this year. The construction schedule for the dedicated electric vehicle plant targeting the North American market was also advanced ahead of the original plan.

However, even with the accelerated construction schedule, mass production is expected to begin only around the second half of 2024, about six months earlier than initially planned, making sales disruptions unavoidable in the meantime. Dedicated electric vehicles such as the Hyundai Ioniq 5 and Kia EV6, as well as eco-friendly models like the Kona EV and Niro EV, have been recognized for their product competitiveness and cost-effectiveness, gaining popularity locally. But after the IRA’s implementation, there are concerns about a sales cliff for contracted volumes.

Last May, U.S. President Joe Biden met with Chung Eui-sun, Chairman of Hyundai Motor Group, during his visit to South Korea and expressed gratitude for the establishment of the electric vehicle plant in Georgia, USA.

Initially, the market had high expectations for Hyundai’s electric vehicle business in the U.S. after President Biden, who visited Korea in May, promised an investment of 14 trillion KRW and assured Hyundai Motor Chairman Chung Euisun that "there will be no disappointment with Hyundai." However, the implementation of the IRA has reportedly caused significant disappointment within Hyundai.

Meanwhile, the government has also taken action. Lee Chang-yang, Minister of Trade, Industry and Energy, stated at a parliamentary standing committee meeting the day before that "the possibility of filing a complaint with the World Trade Organization (WTO) will be actively considered." After the law was made public, the head of the Korea Trade-Investment Promotion Agency conveyed concerns to the U.S. Trade Representative (USTR) about potential violations of WTO rules and the Korea-U.S. Free Trade Agreement (FTA), and plans to discuss the legislation with U.S. officials as soon as possible.

This content was produced with the assistance of AI translation services.