South Korea Is Mad At President Biden Over EV Tax Credits

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The country will meet with the EU to discuss options.

With the signing of the Inflation Reduction Act by President Biden, electric vehicle tax credits have been extended through 2032. There's just one problem; not all EVs will qualify for them. Of the existing EVs and PHEVs on sale, only around 20 or so will receive the $7,500 credit because the law stipulates that the car must be assembled in North America. This immediately rules out a slew of highly-rated EVs from South Korea, including the Hyundai Ioniq 5 and Kia EV6.

South Korea is understandably furious about the new law because it effectively makes EVs from Hyundai, Kia, and Genesis $7,500 more expensive than their American rivals. According to a Reuters report, the country doesn't plan to stay silent on the matter.


The Hyundai Motor Company will meet with the European Union to discuss the issue. "South Korea and Germany, which export EVs to the United States, share similar concerns about the US Inflation Reduction Act, and we plan to seek cooperative plans such as having discussions with Germany and the European Union in the near future," South Korea's Industry Ministry said in a statement.

This legislation equally impacts EVs built in Germany, like the Audi Q4 e-tron that just went on sale in the US this month. The Q4 was supposed to go on sale starting at $43,900 (plus a $7,500 credit), but due to increased manufacturing costs, the price has gone up and now starts at $48,800 (with no credit). BMW and Mercedes-Benz are affected too, with both automakers losing their EV credits.

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The Korea Automobile Manufacturers Association plans to release a joint statement in September with the European Automobile Manufacturers Association. KAMA believes the Inflation Reduction Act will impact over 100,000 EV exports from South Korea, and the legislation discriminates against the country and breaks the economic alliance with the US.

Hyundai is working quickly to build its EV plant in Georgia, but the automaker can only push its plans by so much. Between Hyundai, Kia, and Genesis, the Hyundai Motor Group plans to invest billions into US manufacturing, so the lack of any leeway or phase-out period in the law must have a huge impact.

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South Korea may even file a complaint with the World Trade Organization on the grounds that the Inflation Reduction Act violates the bilateral free trade deal between it and the US. The country has not yet decided if it will take this course of action. As of right now, it seems like foreign automakers have little recourse to get their tax credits back other than moving production to the US, Canada, or Mexico. But perhaps if enough automakers band together to push back, they could influence a change in the legislation.

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2023 Genesis GV60 Front Angle View
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Source Credits: Reuters

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