Hyundai battles to ease EV rule that ‘wounds’ foreign car brands in US

Hyundai isn't too taken with the decision to offer incentives to American customers who purchase an electric car which is manufactured in North America. Possibly expecting to lose out to rivals who do manufacture electric vehicles (EVs) in the country, Hyundai and the South Korean government have reportedly started lobbying to ease the rule.

Hyundai currently does not manufacture its EVs in the US even though products like the Ioniq 5 have found many takers in the country. But with options in the EV space expanding rapidly, Hyundai models could potentially lose out against rivals that would be more affordable to purchase. This is due to a consumer tax credit of up to $7,500 on EVs made in North America.

Manufacturers like Ford, Volkswagen and General Motors have battery and EV facilities in the continent and are likely to benefit from the move to offer incentives for locally-made EVs. But while Hyundai had previously announced huge investments in the US, it will take time to fully operationalize its $5.5 billion facility in Georgia. And till then, it clearly does not want to be left behind.

Hyundai is one of the strongest players in the US automotive market and had sold half a million units of its cars here in the third quarter of the US. Sales of EVs too have been picking up with Hyundai Ioniq 5 as well as Kia EV6 finding plenty of favour. But what now?

Hyundai is pointing to the free trade agreement between South Korea and the US that had accounted for vehicles manufactured or assembled in South Korea to be treated at par with those manufactured in the US. But now, the bill in contention is being seen as a stumbling block with the car maker even claiming that it would slow the transition towards zero-emission mobility options. It is a point of friction that has even invited sharp reactions from the Korean government.

(With inputs from Bloomberg)