South Korea’s automotive manufacturer Hyundai announced the kick-off of a $5.5 billion electric vehicle and battery plant in the United States. The plant is expected to have an annual capacity of 300,000 units. Hyundai plans to begin commercial production in the first half of 2025.
The company said that the ground-breaking project in Savannah, Georgia is part of the Group’s “commitment of $10bn by 2025 to foster future mobility in the US, including production of EVs.” The project is set to kick off even as countries including Korea and the EU protest over USA’s electric tax policy.
In August 2022, US President Joe Biden signed the Inflation Reduction Act. According to the act, all-electric vehicles assembled in North America must qualify for tax credits in the United States. However, the act excluded Hyundai and conglomerate Kia from electric vehicle subsidies as they do not make cars in the USA. A few other major European automakers were also excluded from the act.
As per the Inflation Reduction Law, 70% of electric vehicles are eligible for tax credits, with a charge of up to $7,500 per vehicle.
Commenting about the issue, South Korea said Mr. Biden is open to continuing talks on the USA’s recent act which denies subsidies to most foreign electric vehicle manufacturers.
Besides, Mr. Biden also praised the efforts and investments made by foreign manufacturers, to build electric vehicles and battery plants in the US. This comes just as Honda Motor and LG Energy announced that they would locate a $4.4bn battery plant in Ohio.
Mr. Biden, in his letter to South Korean president Yoon Suk-yeol, promised to address Seoul’s concerns that the new U.S. rules would hurt South Korea’s automakers. As a result of the new law passed this August, only 20 electric vehicles qualify for subsidies. These include models from Ford Motor Co and BMW.