Hyundai Motor, Kia to benefit from Georgia senator bill for IRA grace period

Sept. 30, 2022



By Baek Byung-yeul

Hyundai Motor Group's car brands ¡ª Hyundai Motor, Kia and Genesis ¡ª could benefit from a bill proposed by a senator in the U.S. state of Georgia, which proposes a grace period to automakers that are now subject to the Inflation Reduction Act (IRA). The act requires electric vehicles (EVs) that qualify for a consumer tax credit to have their final assembly done in North America, according to industry officials, Friday. On Sept. 29 (local time), Sen. Raphael Warnock of Georgia announced that he had proposed a bill to give a grace period until 2025 to automakers that manufacture and assemble their EVs outside of North America so that they might still be eligible for the IRA's $7,500 tax credit.

Since U.S. President Joe Biden signed the IRA into law on Aug. 16, customers who purchased EVs assembled or manufactured outside North America have been unable to qualify for the tax credit. Hyundai Motor Group is especially affected by the act, as its EVs are manufactured in Korea, but it was ambitiously trying to increase their presence in the North American market.

Moreover, the IRA also requires EVs qualifying for the tax credit from next year to use critical battery materials sourced from the U.S. or countries that have free trade agreements with the U.S., and for the battery components to be manufactured or assembled in North America. This condition is even more difficult for Hyundai Motor Group to meet, as it only expects to complete its EV production plant in Georgia by 2025.

"If the revision bill to the IRA is made, this will be helpful for carmakers who produce their EVs outside of North America," an official from a local auto industry said on condition of anonymity. "However, even if an amendment is proposed, it will take time to be passed by the U.S. Congress. So we have no choice but to watch what happens."

Kia's EV6 GT electric vehicle / Courtesy of Hyundai Motor Group
Democratic U.S. Senator from Georgia Raphael Warnock stands with Asian American seniors during a campaign event in Norcross, GA., Sept. 27. Warnock said Thursday that he proposed a bill that would give a grace period to automakers that are affected by the Inflation Reduction Act. The act gives a tax credit to electric vehicles only if their final assembly takes place in North America, along with meeting other requirements. EPA-Yonhap

The Affordable Electric Vehicles for America Act proposed by Sen. Warnock calls for a three-year grace period before the IRA's requirements for batteries take effect, and a four-year grace period before the IRA's requirements for electric vehicles are applied.

"I'm focused squarely on helping Georgia car buyers save money and helping car manufacturers who do business in our state thrive. The Affordable Electric Vehicles for America Act will lower costs for Georgians and provide consumers with more options when purchasing an electric vehicle, while also supporting good-paying jobs across our state and bolstering Georgia automakers like Hyundai. I'm going to do everything I can to get this bill over the finish line," Sen. Warnock said.

Hyundai Motor Group's Georgia plant is expected to produce EVs from its three car brands: Hyundai Motor, Kia and Genesis. If the bill proposed by Warnock is passed, the burden on the Korean auto industry will be significantly reduced.

Selected articles from The KoreaTimes