Amid Growing Concerns over U.S. IRA
The stock prices of Hyundai Motor Co. and Kia Corp. both hit new 52-week lows.
On the morning of Dec. 20, Hyundai Motor was trading at 156,000 won, down 1.89 percent from the Dec. 19 closing price of 159,000. Its stock price fell to 157,500 won in the intraday market in the previous day, hitting a new 52-week low. Kia was trading at 61,600 won, down 1.12 percent from the closing price of 62,400 won on Dec. 19.
Investors are concerned about a direct hit from the U.S. Inflation Reduction Act (IRA). Under the IRA, which will take effect in January next year, the U.S. government provides tax credits of up to US$7,500 for a new car and up to US$4,000 for a used car when purchasing electric vehicles produced and assembled in the United States. Hyundai Motor and Kia are considering producing electric vehicles beginning from 2024 at their Alabama and Georgia plants in the United States. The Korean government submitted an opinion to the U.S. government to delay the implementation of the IRA regulations for three years until 2025, but experts say that the possibility of the acceptance of the opinion is not high.
As fears of an economic recession deepen, concerns that the growth of the electric vehicle market will slow down are also weighing on the stock prices. Tesla is stimulating concerns about a slowdown in demand by recently cutting prices of its electric vehicles in the Chinese market.
As the Korean won is gaining strength against the U.S. dollar, it is difficult to expect exchange rate effects beginning from 2023. The exchange rate exceeded 1,400 won per U.S. dollar in the third quarter, but fell to the 1,300 won range. Experts forecast that it will stabilize in the 1,100 won range in 2023.