No Korean EVs make IRA tax credit list

Tesla electric vehicles (EVs) charge at a Tesla Supercharger station in San Ramon, California, in February 2023. [EPA/YONHAP]

Hyundai Motor and Kia's EVs again failed to make the list of EVs eligible for tax credits under the U.S. Inflation Reduction Act (IRA) as new battery sourcing rules took effect on Monday.

The U.S. Treasury Department released a list of 19 EVs — all made by U.S. manufacturers — that will qualify for a maximum subsidy of $7,500 under the act this year. The EVs include five models from Tesla, five from Rivian, four from Ford Motor and three from Stellantis.

The list has more than halved from the previous 43 since tightened sourcing rules restrict automakers from using battery components from China to be eligible for tax credits. Only 10 models are eligible for the full subsidy.

Korea-made EVs failed to make the list as Hyundai Motor and Kia don't have an EV assembly plant in North America. Hyundai's electric version of the Genesis GV70, which is manufactured at its Alabama plant, was eligible for the credit until last April, but has since been exempted.

But the reduced list can still benefit Hyundai's and Kia's sales in the U.S. market, as many of their rivals — including Volkswagen's ID. 4, Cadillac Lyriq, Ford E-Transit and several Tesla models — were also left off the list.

Hyundai and Kia have been focusing on lease programs in order to maintain their U.S. share. The two automakers sold a total of 84,690 EVs last year through the end of November, an on-year increase of 57.8 percent.

The firms, eyeing the IRA, are also building a $5.5 billion plant in Georgia and have advanced the start of production from 2025 to the end of this year.

The IRA dictates that beginning in 2024, an eligible clean vehicle may not contain any battery components that are “manufactured or assembled by” a foreign entity of concern (FEOC), which is owned, controlled or subject to the jurisdiction of China, Russia, North Korea and Iran, according to guidance that the U.S. Department of the Treasury released in December.

Starting in 2025, an eligible clean vehicle “may not contain any critical minerals that were extracted, processed or recycled by an FEOC,” according to guidance.

“Automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States,” The Treasury Department said.

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