[2022 National Audit] "Domestic Electric Vehicles, $20 Trillion Loss Due to US Export Disruptions"

Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy is reporting on business at the Industry, Trade, and Small and Medium Venture Business Committee's audit held at the National Assembly in Yeouido, Seoul on the morning of the 4th.

[Asia Economy Reporter Choi Dae-yeol] Due to the Inflation Reduction Act (IRA) in the United States, sales of Korean-made electric vehicles (EVs) locally have decreased, leading to concerns that sales could drop by up to 20 trillion won over the next three years.

At the National Assembly’s Industry, Trade, Energy, Small and Medium Business Committee’s audit held on the 4th, Lee Jang-seop, a member of the Democratic Party of Korea, questioned Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy about the estimated sales loss. Lee said, “Considering Hyundai Motor and Kia’s market share and sales volume in the U.S., and calculating for about 3 to 4 years until the completion of their U.S. factories, sales losses of around 15 to 20 trillion won are expected,” adding, “This is a situation that requires a serious response.”

Assuming the average price of EVs sold locally is about 53 million won and approximately 200,000 units are sold over the next three years, the estimated amount is about 10.6 trillion won. Hyundai Motor and Kia sold about 35,000 EVs in the U.S. during the first half of this year.

Under the Inflation Reduction Act, only EVs produced locally qualify for a tax credit of $7,500 (approximately 10 million won), which is expected to reduce the price competitiveness of Korean-made EVs. Hyundai Motor and Kia, which produce all EVs sold in the U.S. at their Korean factories, are expected to be directly impacted. The companies are currently undergoing licensing procedures with the goal of operating local EV factories around 2025.

Since dedicated EVs such as the Ioniq 5 and EV6 have been recognized for their marketability locally, and with plans to launch new models consecutively, the industry views the estimate of selling more than 200,000 units and generating tens of trillions of won in sales over three years as feasible. Lee said, “If the EVs exported to the U.S. were produced domestically, the amount would be enormous, including employment and economic ripple effects.”

In response, Minister Lee said that due to many variables, it is difficult to calculate the exact scale of sales losses, but added, “I believe we have responded appropriately to the usual issues.”

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