Hyundai struggles to receive EV tax credits from US: Report

Industry

Published: 24 Jan. 2024, 16:27 Updated: 24 Jan. 2024, 18:04

Hyundai struggles to receive EV tax credits from US: Report

Hyundai Motor Group Executive Chair Euisun Chung shakes hands with U.S. President Joe Biden during a meeting held at Grand Hyatt Seoul in Yongsan, central Seoul, in May. [HYUNDAI MOTOR]

Talks remain inconclusive between Hyundai Motor and the U.S. government over tax incentives for the Korean automaker's $5.5 billion EV plant in Georgia, which could potentially be worth up to about $350 million.

The U.S. Energy Department has not given a clear response to Hyundai's demand for a 30 percent tax credit under the Inflation Reduction Act (IRA), according to a report by Korean media outlet Seoul Daily.

Under an initiative within the IRA, called the 48C Manufacturing Tax Credits program, the U.S. government is set to provide an investment tax credit of "up to 30 percent of qualified investments for certified projects that meet prevailing wage and apprenticeship requirements."

Hyundai is investing a total of $5.5 billion to build an EV-dedicated factory in Georgia, which is set to start operating in October.

The automaker is reported to expect some $350 million in incentives, calculated by applying the maximum 30 percent to its corporate tax rate of 21 percent.

According to the Seoul Daily report, the delayed confirmation comes as the U.S. government intends to prioritize U.S. firms like Intel when distributing the credits. The budget for the 48C program is set at $10 billion.

"We've been constantly discussing with the U.S. government for the incentives," Hyundai Motor confirmed with the Korea JoongAng Daily. "Nothing has been decided, and we're waiting for the result."

Many Korean battery makers have either invested or plan to invest multiple billion dollars in the United States to build manufacturing facilities.

Korea's three major battery makers - LG Energy Solution, Samsung SDI and SK On - have invested more than 64 trillion won to build 14 plants in North America that will open around 2025.

Yet EV sales remain sluggish globally, with automakers facing speed bumps in production and future investments.

American carmaker General Motors postponed the production of its Chevy Equinox EV and Silverado electric pickup trucks, whose batteries are supplied in part by LG Energy Solution and Samsung SDI.

Ford Motor, which uses SK On batteries, also halved the production volume of its electric F-150 Lightning to 1,600 from 3,200 per week.

Hyundai and Kia have not announced any cuts to EV production or investment.

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