EVs Produced in Korea Not Eligible for U.S. Subsidies
The U.S. Senate passed the Inflation Reduction Act on Aug. 6. Every pre-implementation procedure, including a presidential signature, is expected to be completed early this week. The purpose of the act is to limit an EV subsidy of US$7,500 to EVs produced in the United States and equipped with a battery produced in the United States.
Concerns are increasing over Hyundai Motor Group, whose EVs are being produced in South Korea without exception. The group is building an EV plant in Georgia, but the plant will be put into operation in three years. The group needs to change its U.S. business strategy immediately, but the process is unlikely to be smooth as production relocation cannot be done without the union’s consent.
Competition is continuing to heat up in the North American EV market. The group’s U.S. market share was 7.6 percent last month. With Tesla still dominating the market, the group was overtaken by Ford (10.4 percent) and Volkswagen (8.5 percent). The fall in ranking is because truckers in South Korea went on strike to affect export shipment and the number of EV models in the market is increasing.
In the meantime, the act is regarded as an opportunity for LG Energy Solution and SK On, which are running and building plants in the United States together with GM and Ford, respectively. The EV battery manufacturers’ partnerships are expected to expand in relation to European and Japanese as well as U.S. automakers.
The act also stipulates that the subsidy is limited to battery cells each with an energy capacity of 20 Wh or more. At present, LG Energy Solution’s products are 15 to 18 Wh in energy capacity with few companies meeting the condition. LG Energy Solution is planning to start manufacturing such batteries within this year.