Hyundai Begins $5.5 Bn EV, Battery Plant in USA

The South Korean auto conglomerate Hyundai Motor Co is about to break ground for the $5.54 billion electric vehicle and battery plant in the USA. Hyundai wants to have a reasonable share in the electric vehicle sales in America. Georgia Governor Brian Kemp, Senators Jon Ossoff and Raphael Warnock may attend the ceremony of the unveiling.

Hyundai has said previously that commercial production of EVs and batteries will commence in the facility in the first half of 2025. The big-sized factory will be located in Bryan county that lies west of Savannah. As per reports, the factory will have an annual production capacity of 300,000 units.

The New Law and Failing Hyundai Sales

The new factory of Hyundai is being constructed as there is resentment from Korean and European Union EV makers against the new US tax policy with regards to electric vehicles. The Inflation Reduction Act brought by US President Joe Biden last August offers tax credits to those EV makers who assemble their products in North America. Many EV makers, including Hyundai and its affiliate auto company Kia, do not get the state tax credits that other North American based EV makers are receiving. One EV gets upto $7,500 tax credits on purchase. The law has rendered almost 70 per cent of EVs in the USA ineligible for the tax credits.

Under the new law, about 20 electric vehicle models qualify for government subsidy that is meant to push higher adoption of EVs in America. EV models of Ford Motor and BMW also qualify for subsidies.

The immediate result was that the sale of Hyundai EVs is going down drastically in the USA. Hyundai’s Ioniq 5 crossover SUV was reduced by 14 per cent in September compared with August. The shares of the company have fallen after the announcement of the quarterly results on Monday.

According to reports, President Joe Biden will hold talks with South Korea on this matter soon. He had assured South Korean President Yoon Suk-yeol through a letter.

As per the third quarter auto sales data for 2022, the electric vehicles have been sold more than the gas-run vehicles. Tesla has a lion’s share of 64 per cent in the US EV market. The US has over 6 of its vehicles electric models and it wants to achieve 50 of its vehicles to be EV by 2030.