Kia EV9, Union Opposition to US Production Plan... Tough Road Ahead for Wage and Labor Negotiations

Kia Decides to Produce EV9 at US Plant
Union Says "Overseas Volume Transfer Violates Collective Agreement"

Kia's decision to manufacture the mid-to-large electric sports utility vehicle (SUV) EV9 at its U.S. plant has sparked opposition from the labor union. This is because the company unilaterally decided on overseas production without prior agreement with the union. Following earlier conflicts over performance bonuses earlier this year, the controversy over production relocation adds to concerns that this year's wage and collective bargaining negotiations will be challenging.

The Metal Workers' Union Kia Branch (Kia Union) sent a protest letter to management on the 3rd, claiming that the company's decision to produce the EV9 at the Georgia plant in the U.S. violates the collective agreement. The union stated, "According to the collective agreement, if (domestically produced models) are to be produced concurrently at overseas plants, the union must be notified before finalizing the plan, and implementation must be agreed upon by both labor and management at the Employment Security Committee." They added, "The company ignored the collective agreement and unilaterally pushed forward with local production."

Brian Kemp, Governor of Georgia, USA (fifth from the left), and Kia America officials are posing for a photo on the 30th of last month to celebrate the production of the EV9 at the Georgia plant in the United States.
[Photo by Kia America]

According to the union's explanation, the company mentioned the necessity of producing the EV9 in the U.S. during the business plan briefing in February this year. The U.S. Inflation Reduction Act (IRA) offers up to $7,500 (approximately 10 million KRW) in tax credits to some buyers, conditional on local assembly and local parts installation. Currently, all EV9 units are produced at the domestic plant (Gwangmyeong Sohari) and sold both domestically and internationally. Since it does not qualify for the tax credit, its price competitiveness inevitably falls behind.

Despite the challenging conditions, sales are strong. In the U.S., there are few options for mid-to-large electric SUVs, and the EV9's ample driving range and other product qualities have been well received locally. Over 2,000 units were sold in the U.S. last month alone, with cumulative U.S. sales reaching 7,766 units this year. In South Korea, about 1,200 units were sold from January to April this year. As Hyundai Motor and Kia are increasing exports to the U.S., producing the EV9 locally could significantly impact domestic production volumes.

Kia Gwangmyeong Plant EV9 Production Line
[Photo by Hyundai Motor Group]

Currently, the only electric vehicle Hyundai Motor and Kia produce directly in the U.S. is the electrified Genesis GV70 model. Even this model does not qualify for tax credits as it fails to meet battery requirements. Most models with high local demand, such as the Ioniq 5, Ioniq 6, and EV6, are produced in Korea and exported. Some corporate fleet vehicles, including rentals, qualify for tax credits without meeting local assembly requirements, allowing the company to target niche markets and increase local sales.

With wage and collective bargaining negotiations approaching, the emergence of these negative issues is expected to complicate talks. The Kia union has finalized its demands for this year, including a base salary increase of 159,800 KRW, a performance bonus of 30% of operating profit, extension of retirement age, and a 4.5-day workweek. Despite achieving record-high performance last year alongside Hyundai Motor, performance bonuses have not yet been paid, as the company plans to finalize the bonus amount through negotiations.

Meanwhile, Jose Munoz, Chief Operating Officer of Hyundai Motor Group, recently revealed in a local interview that the new plant Hyundai is building in Georgia, U.S., will first produce the Hyundai-exclusive electric vehicle Ioniq 5. The Ioniq 5 is also produced at Hyundai's Ulsan plant as well as some overseas plants in Indonesia and Singapore. It is reported that the company has already explained this matter to the Hyundai Motor union.

Kia Georgia Plant Production Line in the United States
[Photo by Hyundai Motor Group]

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