US House Introduces IRA Amendment Bill...Will Hyundai Motor and Kia Stock Soar?

[Asia Economy Reporter Kwon Jae-hee] As the U.S. House of Representatives has introduced an amendment to the 'Inflation Reduction Act (IRA)' following the Senate, attention is focusing on whether this will serve as a momentum for a stock price rebound in automakers such as Hyundai Motor and Kia. The core of the amendment is to postpone by three years the provision in the IRA that controversially grants subsidies only to electric vehicles made in the USA. If passed, it is expected that Korean automakers will be able to breathe a sigh of relief.

According to the Korea Exchange on the 15th, Hyundai Motor's stock price in the KOSPI market plunged to a 52-week low of 160,000 KRW on the 26th of last month but rebounded, recording an 8.72% increase up to the previous day. Kia Motors also showed a slight rebound from a low of 64,200 KRW on the 3rd.

The recent revival in the stock prices of automakers such as Hyundai Motor and Kia is interpreted as being driven by expectations of the IRA amendment discussions. According to major foreign media on the 14th (local time), Democratic Representative Emanuel Cleaver of Missouri, along with Representatives Terri Sewell of Alabama and Eric Swalwell of California, jointly introduced the 'Affordable Electric Vehicles for America Act.' A similar amendment introduced by Senator Raphael Warnock of Georgia is pending in the Senate, indicating that both chambers are demanding revisions to the IRA. The key point of this bill is to delay the implementation of the IRA provision that offers a $7,500 tax credit only for vehicles produced in North America from next year to 2026.

If this bill passes, Hyundai Motor is expected to be a direct beneficiary. Originally, Hyundai Motor had planned to build a factory in Georgia next year in response to the IRA but advanced the schedule and broke ground last month. This plant is scheduled to operate in 2025, and if the IRA amendment grants a three-year postponement, Hyundai will benefit from the exemption from 2022 to 2024 and will be able to target the local market independently of the IRA from 2025 when the plant is completed.

Yoo Ji-woong, a researcher at Daol Investment & Securities, said, "Since the announcement of the U.S. IRA in July, automakers' stock prices have shown a downward trend," adding, "Current stock prices are significantly undervalued, and the possibility of IRA adjustments is clearly open. The stock price rebound will be re-evaluated based on plans to utilize U.S. factories rather than short-term earnings."

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