US to Introduce Guidelines of EV Tax Credits in March 2023

According to South Korea’s visiting Industry Vice Minister Jang Young-jin, the United States intends to release additional information on the provision of tax credits for the purchase of new electric vehicles (EVs) the following month, as scheduled.

This week, Jang arrived in Washington to discuss a variety of topics with his American counterpart, Deputy Secretary of Commerce Don Graves, including the Inflation Reduction Act (IRA). According to the Yonhap news agency, the IRA provides each purchaser of a new electric vehicle built in North America with batteries made of a certain quantity of critical minerals produced in the region with tax credits from the United States government worth up to $7,500.

In a previous statement, the US Department of Treasury stated that information regarding the critical mineral and battery component requirements that automobiles must meet in order to be eligible for IRA tax incentives would be made available in March 2023. During a meeting with reporters here, Jang Young-jin stated, they have asked the US side to quickly make clear. It is not advantageous for us to maintain this uncertain environment.

Since no South Korean automakers currently produce EVs in the region, Seoul has been expressing concerns that the IRA, which was enacted into law in August 2022, may undermine the competitiveness of South Korean-made electric vehicles in the United States.

Hyundai Motor and Kia Motors, the two largest carmakers in South Korea, are expected to begin producing electric vehicles (EVs) in the United States in 2023. However, the requirements for EV battery minerals and components may once again prevent their clean energy vehicles, which are expected to be manufactured here, from receiving the full benefits of the IRA.

If the IRA continues to harm the company’s business in the United States, a local Hyundai Motor official has stated that the company may be forced to consider moving its currently under construction US production facilities. The official also noted that the company has made significant investments outside of North America to secure crucial minerals for electric vehicles. Jang claimed that he had fully articulated Seoul’s position regarding the proposed guidelines for the minerals and components of electric vehicle batteries. He stated that the US side would also carefully examine it.