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Blocked out, the U.S. “Reducing Inflation Act” excludes subsidies for many Korean EV models – yqqlm

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After the United States signed the “Reducing Inflation Act”, news came out from South Korea that from August 16 local time,U.S. to stop paying subsidies for electric vehicles (EVs) not assembled in North America. The U.S. government has published a list of electric vehicles eligible for subsidies.

By the end of the year, 21 models assembled in North America alone will receiveUp to $7500(about 50,850 RMB). The list does not include the five models Hyundai Motor Group sells in the U.S. market – the IONIQ5, KonaEV, Genesis GV60, EV6 and NiroEV.

The Reducing Inflation Act only subsidizes electric vehicles assembled in North America, perhaps with more than a certain percentage of battery materials or components coming from countries that have signed free trade agreements (FTAs) with the United States. Although the U.S. government chose to subsidize electric vehicles this time based on North American final assembly conditions, it added that it would announce a new list in January. It will also require a certain percentage of components and raw materials for electric vehicle batteries to be manufactured in North America by 2023. The policy has put South Korea’s auto and battery makers on red alert.

According to the U.S. Department of Energy,A total of 21 models are eligible for the subsidy. Among overseas car companies, some EV and PHEV models such as Mercedes-Benz, Audi, BMW, Jeep and Volvo produced in North America will receive subsidies.Among Asian companies, only one Nissan EV makes the list. Tesla and GM, which already meet North American manufacturing standards, are capped at 200,000 vehicles per brand, so their cars will be subsidized starting in 2023.

All five models sold by Hyundai Motor Group in the U.S. are produced in South Korea and exported to the U.S.. Currently, the group does not have any electric vehicle assembly lines in the United States. The EV factory decided to build in Georgia is expected to be completed in 2025. While the group plans to transform existing U.S. production lines into EVs such as the GV70EV and EV9, major models such as the IONIQ5 are highly likely to be excluded from the U.S. government’s subsidy list for a long time to come.

In the first half of this year, Hyundai Motor Group ranked second in the U.S. electric vehicle sales chart with a market share of about 9%, behind Tesla’s 70%. Despite Tesla’s unstoppable strength, modern staples like the IONIQ5 and EV6 are well-received, beating out rivals like Ford and Volkswagen. As of July, the group had exported about 40,000 electric vehicles to the United States.

In addition, the US government has also removed the subsidy limit for each brand, with a threshold of 200,000 vehicles. With more than 200,000 Tesla and GM electric vehicles currently sold, buyers won’t be able to get subsidies for those models in the second half of the year. However, starting next year, Tesla and GM electric vehicles will be exempt from the 200,000-vehicle cap, and all vehicles sold will be subsidized. U.S. automakers such as Tesla and General Motors are highly likely to further strengthen their position in the U.S. electric vehicle market.

South Korea’s three biggest battery makers – LG Energy Solution, SKOn and Samsung SDI – are also highly likely to suffer setbacks under the new subsidy rules. This is because regulations regarding battery production areas and raw material procurement will come into effect. Under the Reducing Inflation Act, in order to receive half of the $7,500 subsidy starting next year, automakers will have to use batteries made from core materials supplied by the United States or countries that have signed a free trade agreement (FTA) with the United States. In addition, the other half of the subsidy can only be given if at least 50% of the main battery components are manufactured in North America.

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