US Reveals 16 EV Models Eligible for IRA Subsidies... Hyundai and Kia Excluded

On the 17th (local time), the Biden administration announced 16 electric vehicle models eligible for subsidies of up to $7,500 under the detailed guidelines of the Inflation Reduction Act (IRA). As expected, Korean, German, and Japanese brands, including Hyundai and Kia, were all excluded.

The electric vehicles eligible for subsidies, revealed by the U.S. Treasury Department on the same day, include Tesla Model 3 and Model Y, Chevrolet Bolt, Equinox, Blazer, Silverado, and Ford E-Transit, F150 Lightning, and Mustang. Hyundai and Kia, as well as German and Japanese brands, failed to meet the requirements and were left off the list. The New York Times (NYT) reported, "Vehicles from allies such as Korea and Germany were also excluded. There are no foreign car brands on the list," adding, "Overseas automakers like Hyundai will be placed at a significant disadvantage going forward."

[Image source=Reuters Yonhap News]

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The IRA, passed by the U.S. Congress in August last year, essentially provides tax credits of up to $7,500 only for electric vehicles assembled in North America. Starting this year, in addition to the North American assembly requirement, stricter battery requirements must also be met to qualify for the subsidy, significantly reducing the overall eligible vehicles. Nissan, which operates factories in North America, as well as some U.S.-made electric vehicles, were excluded from this list for failing to meet the battery requirements.

According to the recently released detailed guidelines, even electric vehicles finally assembled in North America from this year must meet the following conditions to receive subsidies: ▲ $3,750 if more than 50% of battery components are manufactured or assembled in North America, and ▲ $3,750 if more than 40% of critical minerals are mined or processed in the U.S. or Free Trade Agreement (FTA) countries. Both conditions must be met to receive the full $7,500 subsidy.

Bloomberg News reported, "The number of vehicle models eligible for the full tax credit has roughly halved under the detailed guidelines," adding, "This formalizes many concerns automakers had." It is understood that 10 models qualify for the full $7,500 subsidy, while 6 models qualify for partial subsidies. Electric vehicles such as the Ford Mustang and E-Transit, and the standard range version of the Tesla Model 3, have their subsidies reduced to $3,750.

This detailed IRA guideline is part of the Biden administration's efforts to reduce dependence on China in key supply chains, including electric vehicle batteries. Automakers excluded from the subsidy list are likely to fall behind in the electric vehicle competition. GM’s Chief Financial Officer Paul Jacobson expressed optimism to the NYT, saying it "will have a multiplier effect." On the other hand, Jose Munoz, president of Hyundai’s North American division, told reporters at the New York International Auto Show earlier this month that he was "not happy" about Hyundai’s electric vehicle Ioniq 6 being named Car of the Year but excluded from the IRA subsidy. He added that Hyundai and the Korean government requested the Biden administration to allow subsidies while North American factories are being built, but were told there would be no exceptions.

Alongside this, the Biden administration also unveiled additional measures to expand electric vehicle adoption on the same day. The White House stated in a press release, "To achieve President Biden’s goal of making 50% of new vehicle sales electric by 2030, we are announcing private and public sector electric vehicle initiatives," describing this as part of the 'Invest in America' plan to revitalize manufacturing and strengthen U.S. competitiveness.

The new measures include participation from ride-sharing services such as Uber. Uber plans to expand electric vehicle miles driven on its platform to 400 million miles (approximately 643.7 million km) by the end of this year through its own 'Green Future' program, which converts drivers’ vehicles to electric. Zipcar has committed to allocating 25% of its electric vehicles to vulnerable populations. Companies like Xcel Energy and Colorado Car Share are launching separate electric vehicle sharing programs. Additionally, investments in charging infrastructure will be made with regional anchor companies, including installing charging stations at Walmart and Sam’s Club locations nationwide by 2030.

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