Economic Chief: Exclusion from US IRA Subsidies "No Major Damage to Cars, Big Opportunity for Batteries"

Choi Sang-mok "Holding Steady Until Hyundai Motor Georgia Plant Completion"
17 out of 22 Electric Vehicles Use Korean Batteries
President Yoon Emphasizes ROK-US Alliance at Cabinet Meeting
"ROK-US, a Value Alliance Capable of Adjustment Even When Issues Arise"

The Presidential Office stated on the 18th that the exclusion of Hyundai Motor and Kia electric vehicles from the list of electric car models eligible for subsidies of up to $7,500 (9.9 million KRW) under the U.S. Inflation Reduction Act (IRA) would not significantly impact electric vehicle exports. In particular, the Presidential Office believes that the battery sector has rather opened up new opportunities.

Choi Sang-mok, Senior Secretary for Economic Affairs, told reporters at the Yongsan Presidential Office on the same day, "Hyundai Motor Group's electric vehicle sales in the U.S. have not been significantly affected and have actually expanded."

Choi made this clarification directly after analyses suggested that the exclusion of Hyundai and Kia models from the tax credit eligibility might hinder electric vehicle and battery exports targeting the North American market.

Earlier, the U.S. government announced the list of electric vehicle models eligible for up to $7,500 in tax credits under the detailed guidelines of the Inflation Reduction Act (IRA) on the previous day, local time.

Specifically, the battery mineral and component requirements were detailed, and the number of electric vehicle models eligible for tax credits was reduced from 39 models by 14 manufacturers to 22 models by 7 manufacturers. Electric vehicles from not only Korea but also Germany and Japan were excluded.

Choi referenced the Korea-U.S. summit between President Yoon Suk-yeol and U.S. President Joe Biden, the meeting with U.S. Vice President Kamala Harris where advanced industry cooperation and support for Korean companies were requested, as well as a letter from President Biden related to the IRA, emphasizing that the government's diplomatic efforts have borne fruit.

Choi explained, "In December last year, commercial vehicles such as rentals and leases were recognized as exceptions to the subsidy payment conditions, so Korean-exported electric vehicles also became eligible for the $7,500 subsidy." He added, "Sales were 5,500 units in August last year, but in March this year, they reached 14,400 units. Among total U.S. sales, the proportion of commercial vehicle sales eligible for subsidies such as rentals and leases increased from 5% last year to 28% this year."

Choi also mentioned Hyundai's dedicated electric vehicle factory being built in Georgia, USA, stating, "They can hold their ground until mass production begins in the second half of next year."

[Image source=Yonhap News]

The Presidential Office views that the three domestic battery companies?LG Energy Solution, Samsung SDI, and SK On?will actually benefit in exports.

Choi said, "Among the 22 electric vehicle models from the 7 announced manufacturers, 17 use Korean batteries," and explained, "The newly defined battery mineral and component requirements present a very significant opportunity for the three Korean battery companies."

Meanwhile, President Yoon, who will make a state visit to the U.S. at the end of this month, reportedly said at the Cabinet meeting held that morning, "The Korea-U.S. alliance is not a relationship that shifts according to interests but an alliance based on universal values such as liberal democracy and market economy," according to Lee Do-woon, spokesperson for the Presidential Office.

When asked by reporters whether this was a reference to U.S. surveillance and wiretapping, a Presidential Office official responded, "Brothers can fight for various reasons. But just because they fight doesn't mean they are not brothers or not family." He added, "An alliance cannot have all interests aligned. Even among allies, economic or other issues can cause conflicts of interest, but if differences can be overcome through dialogue and negotiation based on trust, they can be resolved within that framework."

He continued, "If the relationship between two countries were based solely on mutual interests, even small disputes could break the relationship. But Korea and the U.S. are together under the greater values of liberal democracy and market economy, so small disputes or conflicts of interest can occur."

[Image source=Yonhap News]

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