"Should European Electric Cars Also Receive Subsidies? Will a Solution to the Inflation Reduction Act Emerge?"

EU Trade Ministers Request US Revision
"Equal Treatment as Canada and Mexico"
Discussion at This Week's Interim Committee

President Joe Biden of the United States

[Asia Economy Reporter Choi Dae-yeol] Trade officials from Europe and the United States met to discuss the origin discrimination issue addressed in the Inflation Reduction Act (IRA), according to major foreign media.

European officials argued that tax credit benefits should also be extended to European-made electric vehicles, not only those finally assembled in the North American region. Since Korean automakers are also significantly affected by the Inflation Reduction Act, there is growing interest in how the discussions will proceed.

According to foreign media and the automotive industry on the 1st, at a meeting held in Prague on the 31st of last month (local time), the European Union (EU) Trade Commissioner and Katherine Tai, the United States Trade Representative, exchanged views on amending the Inflation Reduction Act.

The law provides a tax credit benefit of $7,500 (approximately 10 million KRW) only for electric vehicles finally assembled in the United States, Canada, or Mexico. Key components such as batteries must also be sourced from countries that have agreements with the United States.

Last September, U.S. President Joe Biden, visiting the Detroit Auto Show, was getting off the Chevrolet electric pickup truck Silverado EV, guided by GM Chairwoman Mary Barra.

Josef S?kela, Czech Minister of Industry and Trade and the rotating chair of the EU side, said after the meeting, "Electric vehicles or batteries originating from the EU should be sold in the United States while receiving the same benefits as those from Canada and Mexico." Foreign media reported that the interim US-EU working group meeting scheduled for this week will address agenda items including amendments to the Inflation Reduction Act.

Since Korean-made electric vehicles are also heavily impacted by the Inflation Reduction Act, attention is focused on what outcomes will emerge from this working group. Hyundai Motor and Kia, which account for most of Korea's electric vehicle exports, do not yet have electric vehicle production facilities in the United States. Hyundai and Kia rank second in electric vehicle market share in the US after Tesla. Going forward, they are inevitably at risk of being outcompeted by locally produced electric vehicles emphasizing price competitiveness.

Both the Korean government and Hyundai Motor Group have expressed negative positions regarding this law. They are also reportedly discussing ways to delay its application or to create exceptions. However, given the expected political and governmental turbulence in the US due to the upcoming midterm elections, it is also anticipated that receiving separate benefits will not be easy.

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