South Korea and the U.S. embarking on regulatory adjustments

Hyundai executives and government officials will break ground on the automaker’s new Metaplant America on Tuesday, Oct. 25, 2022, in Bryan County, Georgia.

CNBC | Michael Weiland

Savannah, GA – South Korean officials are working closely with the U.S. government to adjust restrictive regulations on electric vehicles under the recently passed Inflation Reduction Act, a county trade ambassador said.

South Korea’s ambassador to the US Cho Tae-young on “several possible options” to rectify what the country considers to be an unfair policy that removed the up to $7,500 tax credit for EVs produced outside North America. Officials said they were discussing it.

“We are having very intense discussions right now.” Hyundai Motor Group Near Savannah, Georgia. “There is so much goodwill and determination to find a solution on both sides.”

Cho declined to discuss potential solutions, saying some would require the approval of the Biden administration and others would require Congressional involvement.

Substantial increase in plug-in electric vehicles under IRA Produced in North America Eligible for tax incentives. Previously it covered all plug-in EVs.

Hyundai, which includes Kia Motors, ranks second in sales of all-electric vehicles in the United States. TeslaThe company argues the anti-inflation laws are unfair because South Korea, which now produces electric cars, has a free trade agreement with the United States.

Hyundai’s global president and COO, Jose Munoz, told media on Tuesday that the company is “deeply involved” in discussions with U.S. and South Korean officials on the anti-inflation law.

Muñoz said his vehicles would likely not be eligible for U.S. EV credits until early 2026, when the joint venture’s battery plant is expected to come online, barring a change in regulations.

The current regulations will phase in stricter procurement requirements for battery components and raw materials. They are designed to ease the automotive industry’s dependence on such materials from China.

Munoz explained the loss of credit last week: It hits automakers’ bottom line hard. Hyundai and others have lobbied to withdraw some of these requirements. Hyundai Motor and Kia Motors operate separately in the United States, but are owned by the Hyundai Motor Group.

At Tuesday’s event, US Deputy Commerce Secretary Don Graves called South Korea a strong trading partner but did not comment on the inflation-cutting bill. Last week, U.S. Trade Representative Catherine Tai spoke with South Korea’s Trade Minister Ahn Duk-geun about her IRA.

Located west of Savannah in Bryan County, the new Metaplant America is scheduled to open in the first half of 2025 and has an annual capacity of 300,000 vehicles.

Hyundai plans to produce a wide range of electric vehicles and car batteries for US customers at the new plant.

“This is going to be a massive operation on a scale that is difficult to comprehend,” Munoz said Tuesday.

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