Hyundai Motor (HYMTF) , the legacy South Korean automaker, could ramp up construction of its electric vehicle (EV) plant and break ground later this year in Georgia to take advantage of a new tax break favoring EVs built in the U.S.
The automaker had originally planned to start construction in January 2023 and begin production of the EVs in the first half of 2025, but could now speed things up since the Biden administration passed a law that only gives tax credits to EVs built in the U.S., according to Yonhap, a Korean wire service, on Aug. 22.
Hyundai could begin building the $5.4 billion plant that would manufacture both EVs and batteries later in 2022 and start producing EVs during the second half of 2024, an unidentified auto industry source told Yonhap. The plant is projected to manufacture 300,000 EVs annually.
New Biden Climate Bill Benefits U.S. EVs
The Inflation Reduction Act expands tax subsidies, but only for EVs assembled in North America. The bill also includes provisions intended to prevent EV manufacturers from receiving the tax benefits if they are equipped with batteries or battery components made using minerals from China.
The bill that was signed by President Joe Biden on Aug. 16 also halts tax credits for roughly 70% of the 72 EV models that were eligible before.
Hyundai Motor currently produces all of its EVs in South Korea and this new law could result in a “major setback for Hyundai and Kia, whose flagship EVs, like the IONIQ 5 and EV6, have been gaining popularity in both the US and European markets in recent years,” said Jamal Amir, a senior research analyst at S&P Global Mobility.
The automaker’s plans include rolling out 17 EVs by 2030, including six Genesis models while Kia is scheduled to release 14 EVs by 2027, he said.
Hyundai Motor’s goal is to sell 3.23 million EVs, including 840,000 units in the U.S. in 2030 to reach for 12% of the global EV market.
The impact of the new legislation was discussed by South Korean Foreign Minister Park Jin last week during a call with U.S. Secretary of State Antony Blinken, according to a foreign ministry official, Reuters reported.
Americans Are Fans of Hyundai EVs
Hyundai has now become the second biggest seller of EVs in the U.S. due to two popular two models: the futuristic SUV Ioniq 5 and the EV6 crossover.
The automaker poses as a greater threat to Tesla compared to Ford (F), Volkswagen (VLKAF) , GM (GM), or even Mercedes-Benz (DDAIF).
Hyundai’s plan to construct a second plant in Georgia would be a boon to the state that is becoming a major EV manufacturer. Rivian announced in December that it plans to build its second U.S. plant in Georgia.
In May, Hyundai said, "We are excited to announce a new EV plant plan in the United States soon, but we do not have details to share at this stage," in a statement given to Reuters.
Hyundai dedicated $300 million to manufacture an all-electric Genesis GV 70 and a hybrid version of its Santa Fe SUV at its Alabama factory in April.
SK Innovation battery unit SK On, Hyundai's battery supplier, has constructed two adjacent battery plants in Georgia.
