Hyundai Motor: "We Will Find a Direct Solution to the US IRA Within This Year"

Jose Munoz, Chief Operating Officer of Hyundai Motor Company, is speaking at the Reuters Automotive USA Conference held in Detroit, USA, on the 19th (local time).

[Asia Economy Reporter Choi Dae-yeol] Jose Munoz, Chief Operating Officer (COO, President, concurrently Head of North America Division and President of U.S. subsidiary) of Hyundai Motor Company, said regarding the U.S. Inflation Reduction Act (IRA), "I want to find a solution within this year."

He also revealed that Hyundai Motor and Kia expect sales disruptions in the U.S. due to the Inflation Reduction Act and are taking measures through multiple channels. Until now, Hyundai Motor Group has responded to the Inflation Reduction Act in a low-key, passive manner without a clear stance. Munoz's remarks are interpreted as a signal that Hyundai Motor Group will actively respond to the related law going forward.

On the 19th (local time), Munoz attended a Reuters-hosted conference in Detroit, U.S., and mentioned the Inflation Reduction Act, saying, "If nothing changes, the impact will be astronomical." This law, signed by U.S. President Joe Biden in August, disallows a $7,500 (approximately 10 million KRW) tax credit for foreign eco-friendly vehicles (electric vehicles and hybrids) or battery materials unless a certain percentage is sourced from the U.S. or countries with which the U.S. has a Free Trade Agreement (FTA).

Since electric vehicles are generally more expensive than internal combustion engine vehicles, the availability of such tax credits is expected to significantly affect price competitiveness in the industry. Domestic and international experts and foreign media predict that Hyundai Motor and Kia, which have been prominent in the U.S. electric vehicle market this year, will suffer the greatest impact from this measure.

Last May, U.S. President Joe Biden visited South Korea and met with Chung Eui-sun, Chairman of Hyundai Motor Group, to discuss investment plans in the United States. After the meeting, President Biden is leaving together with Chairman Chung following a press conference.

Munoz did not mention the expected financial impact or the nature of lobbying efforts directed at the U.S. government and Congress. However, the industry views this as a sign that the previously reluctant stance of Hyundai Motor Group's senior management regarding this issue may be changing. It is known that Hyundai Motor Group is devising various countermeasures internally concerning the Inflation Reduction Act, but externally has maintained a reserved attitude, citing it as a 'government-level trade policy issue.' The Korean government also recognizes the importance of this matter, with statements such as "We will mobilize all diplomatic and economic channels to devise multifaceted solutions" (Prime Minister Han Duck-soo) and "We are discussing several solutions with the U.S." (Cho Tae-yong, Korean Ambassador to the U.S.).

The problem is that finding a solution is not easy. The provisions allowing tax credit benefits are so restrictive that it is difficult to make exceptions for Korea even in subordinate enforcement ordinances. Granting a grace period for Korean-made electric vehicles is also likely to raise fairness issues. Hyundai Motor Group's dedicated electric vehicle plant for local production has not yet broken ground. The new plant is expected to begin operations around 2025. President Biden has emphasized that since the enactment of the Inflation Reduction Act, major automakers and battery makers have increased or accelerated investments in the U.S., thereby creating more jobs domestically.

In addition to government-level responses, there are signs that Hyundai Motor Group is also actively engaging in lobbying activities directed at the U.S. government and Congress to resolve this issue. Bloomberg News cited anonymous sources reporting that Hyundai Motor Group Chairman Chung Euisun may meet Ali Zaidi, White House Climate Advisor, after attending the groundbreaking ceremony for the Georgia plant scheduled for the end of this month.

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