"Double Penalty" Hyundai Motor's Background for Urging IRA Amendment...

Exclusion of Hyundai Electric Vehicles from IRA Tax Credit Benefits
"Reduced Production and Sales, Employment Shrinkage, Punishment by State Governments"
Local Political Figures Demand IRA Application Suspension

Hyundai Motor Group Chairman Chung Eui-sun (from left), Brian Kemp, Governor of Georgia, USA, and Jose Munoz, Chief Operating Officer of Hyundai Motor, are raising congratulatory glasses at the groundbreaking ceremony of the electric vehicle factory on the 25th (local time).

[Asia Economy Reporters Choi Dae-yeol and Yoo Hyun-seok] "We will be penalized twice."

Jose Munoz, Chief Operating Officer of Hyundai Motor Company (also Head of the Americas Division and President), said this during a press meeting at the groundbreaking ceremony of a new electric vehicle factory held on the 25th (local time), according to local foreign media. He referred to the fact that they will not be able to receive the $7,500 (about 10 million KRW) tax credit under the U.S. Inflation Reduction Act (IRA), and as a result, local electric vehicle sales and production will decrease, potentially leading to a second penalty for failing to meet the workforce hiring commitments initially promised to the state government.

The Inflation Reduction Act inevitably acts as a negative factor for Hyundai Motor Group, which had been prominent in the local electric vehicle market. According to the company, Hyundai and Kia's electric vehicle sales in the U.S. reached 47,095 units through the third quarter of this year, a 212% increase compared to the same period last year. This is the second highest level after Tesla, the world's largest electric vehicle maker with a local production base. This success is attributed to the recognized product competitiveness of dedicated electric vehicles such as the Ioniq 5 and EV6.

Jang Jae-hoon, President of Hyundai Motor Company, is speaking at the second part of the groundbreaking ceremony held on the 25th (local time) at the Savannah Arena in Georgia, USA. The event was organized about a 30-minute drive from the site of Hyundai Motor's new factory to introduce Hyundai's new vehicles and latest technologies to local residents.

However, it has become difficult to continue this trend under the Inflation Reduction Act. Market competition has intensified, but price competitiveness has declined. According to current regulations, even if Hyundai Motor Group builds the factory on schedule and quickly establishes mass production, it will not immediately qualify for the tax credit benefits. It must also be verified whether the batteries supplied through the locally built battery joint venture factory meet the origin criteria.

Munoz said, "Vehicles produced at the new factory to be established in the future may not fully receive the tax credit until batteries are produced in 2026," adding, "The issue of how to endure the next two to three years is serious."

Hyundai Motor Group considers the U.S. market important in the electrification transition process. The company has set a target of 3.23 million electric vehicle sales domestically and internationally by 2030, of which 840,000 units are planned for the U.S. alone, accounting for more than a quarter. Along with the new electric vehicle factories to be established in Ulsan and Hwaseong in Korea, the new U.S. factory is also being pushed forward with a goal to start operations around mid-2025. These three production bases will serve as key hubs in Hyundai Motor Group's company-wide electrification transition efforts.

On the 25th (local time), residents of the Georgia area participated in the second part of the groundbreaking ceremony held at the Savannah Anne Market Arena in Georgia, USA, enjoying the event by viewing the exhibited vehicles.

There is significant resistance to the Inflation Reduction Act, especially among overseas automakers without local electric vehicle production bases, including Hyundai. However, it is unlikely that the situation will change dramatically in the near future. At the groundbreaking ceremony, U.S. Senator Raphael Warnock, who attended the event, introduced a bill that would exempt electric vehicles from companies like Hyundai that build local factories from the final assembly requirement.

Senator Warnock also sent a letter urging the Treasury Department to apply the law flexibly during its implementation process. U.S. Treasury Secretary Janet Yellen has acknowledged concerns from Korea and Europe but maintains the position that "the law must be implemented as written."

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