U.S. officials discuss IRA with Korean battery makers: Sources

LG Energy Solution's headquarters in Yeouido, western Seoul. [NEWS1]

U.S. Energy Department officials met with Korean battery makers to discuss the implementation of the Inflation Reduction Act (IRA).

The Energy Department determines which cars are qualified for subsidies under the IRA in relation to material sourcing for batteries used in the vehicles.

"It is correct that they held meetings, though nothing about what they discussed has been disclosed," sources with knowledge of the meetings said.

The U.S. government has also met with Posco Chemical and Lotte Chemical, battery materials companies, the sources said.

Local media reported that U.S. officials have also met with Hyundai Motor. But Hyundai Motor said that no meeting took place.

The meetings came after the U.S. government granted SK hynix a one-year waiver on restrictions related to the importing of certain semiconductor-related technologies into China on Wednesday.

Under the terms of the Inflation Reduction Act (IRA), buyers of EVs assembled in the United States are eligible for a $7,500 tax credit for vehicles purchased after Aug. 16, 2022, extending an existing program that offered a $7,500 tax credit for EV purchases regardless of origin.

After Jan. 1, 2023, content requirements for batteries begin to phase in over a number of years. In 2023, 40 percent of critical-mineral value will have to come from the United States or countries that the United States has signed free trade agreements with to qualify for $3,750 of the credit. That number increases 10 percentage points a year to 80 percent in 2027.

Fifty percent of battery-component value will have to come from the United States to qualify for another $3,750 of the tax credit. That number will increase 10 percentage points a year to 100 percent by 2029.

To qualify for the subsidy, a vehicle must be completely free of Chinese-made components from 2024 and free of Chinese critical minerals from 2025.

Critical minerals include lithium, cobalt, nickel, tin, tungsten and graphite, while components include cathodes, anodes, electrolytes and separators made with those minerals.

BY SARAH CHEA [chea.sarah@joongang.co.kr]