President Joe Biden signed the Inflation Reduction Act into law in late August, designed to incentivize domestic EV production and reduce reliance on foreign supply chains.
The legislation, which alters the eligibility requirements of a long-standing $7,500 EV tax credit, has the auto industry scrambling to reshape complex production plans and supply chains to meet stringent sourcing rules.
To qualify for the federal incentive, automakers must now assemble EVs in North America. New restrictions on sticker price, buyer income, and battery component and critical mineral sourcing take effect Jan. 1.
Only about 20 EVs qualify for subsidies under the new rules, among them models from Ford and BMW and, starting next year, GM and Tesla.
The new law has caught the industry off-guard, including South Korea-based Hyundai Motor Group, which previously announced more than $10 billion in U.S. investments, including a $5.5 billion EV plant in Georgia.
Reuters reported South Korean officials have met with U.S. counterparts to express concerns, and the Financial Times reported Hyundai Motor Group Chairman Euisun Chung also headed to Washington.
“Our U.S. EV factory plan was to get subsidies in light of the growing EV market in the United States,” a company official told Reuters. “The new law negatively and directly affects us.”
Seoul has asked Washington to postpone the new rules until the completion of its Georgia factory in 2025 and noted the new law might violate treaties such as the U.S.-South Korea free trade agreement.
