President Joe Biden signed the Inflation Reduction Act into law in late August, which was designed to stimulate domestic EV production and reduce reliance on foreign supply chains.
The law, which replaces the eligibility requirements for a long-standing $7,500 EV tax credit, has left the auto industry scrambling to re-shape complex production plans and supply chains to meet stringent sourcing regulations. .
To qualify for the federal incentive, automakers must now assemble the EV in North America. Sticker prices, buyer earnings, and new restrictions on sourcing battery components and critical minerals will take effect on January 1.
Only 20 EVs eligible for the subsidy under the new rules include models from Ford and BMW and those from GM and Tesla starting next year.
The new law has locked down industry including South Korea-based Hyundai Motor Group, which previously announced more than $10 billion in US investments, including a $5.5 billion EV plant in Georgia.
Reuters reported that South Korean officials have met with US counterparts to express concern, and financial Times The report also headed to Washington, the chairman of Hyundai Motor Group, Euisun Chung.
“Our US EV factory plans were to receive 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, noting that the new law could violate treaties such as the US-South Korea free trade agreement.