Hyundai, Kia urged to speed up production of EVs in US

The Korea Times

The Korea Times

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Wed, September 27, 2023 | 23:32

Companies

Hyundai, Kia urged to speed up production of EVs in US

Posted : 2022-08-08 16:16

Updated : 2022-08-08 16:58

Hyundai Motor Group Chairman Chung Euisun, left, shakes hands with U.S. President Joe Biden during his visit to Korea at the Grand Hyatt Hotel in Seoul on May 22. / Yonhap

By Kim Hyun-bin

Concerns are growing that Hyundai Motor and Kia could lose their competitiveness in the U.S. electric vehicle (EV) market unless they speed up production there amid the passage of the Inflation Reduction Act, under which EV subsidies are offered only to locally produced cars, according to industry officials Monday. The U.S. Senate passed the first draft with a 51-50 vote Sunday, while a signature from U.S. President Joe Biden is expected to be made later this week after the House vote.

The core of the bill is the $369 billion green stimulus package and within it the industry is paying keen attention to new EV subsidies. If the bill is passed this month, a subsidy of $7,500 per vehicle will be provided in the form of tax credits only for EVs produced in North America that are equipped with batteries produced in the country.

"If the bill is passed, there may be confusion, and need for partially revising the business direction in accordance with the relevant content, but the company will have to find various ways to deal with it," an industry official familiar with the matter said.

There are concerns that Hyundai and Kia may lose their competitiveness as they do not have EV production facilities in the U.S. Hyundai Motor's popular EV vehicles ― Ioniq 5 and Kia EV6 ― are all being produced in Korea. Hyundai Motor plans to produce the GV70 EV in November and Kia plans to locally produce the EV9 in the second half of next year. The problem is that Hyundai's new Georgia EV plant will not complete construction until 2025 and experts point out that other strategic measures need to be made to stay competitive in the U.S. market.

Even if Hyundai Motor re-establishes its U.S. strategy, the strong opposition from its labor union is a major stumbling block. This is because, according to a collective agreement, union consent is required to move a model that is being produced in Korea to another country for production.

Hyundai Motor's Ioniq 5 Ulsan production line / Yonhap

"If we do not advance the production of electric vehicles in the U.S., we may miss the opportunity to dominate the market, so the decision is urgent," Lim Eun-young, a researcher at Samsung Securities said.

The North American EV market is growing fiercer. According to Samsung Securities, Hyundai Motor and Kia's market share of EVs in the U.S. was recorded at 7.6 percent last month, falling two places to fourth. Against Tesla's dominance, Ford took second place with 10.4 percent and Volkswagen took third place with 8.5 percent. Industry analysts say that the decline in Hyundai Motor and Kia's market share is attributed to a decrease in export shipments due to the strike by the cargo alliance and an increase in models offered by local competitors.

hyunbin@koreatimes.co.kr