‘New car effect’ has decreased since July
Ministry of Industry, IRA 2nd Opinion to the US
US sales of Hyundai Motor Group’s electric vehicles, such as Hyundai Motor’s Ioniq 5 and Kia’s EV6, have been on a steep decline since last July. It is analyzed that the new car effect is largely due to the reduced supply volume, but it is also predicted that the impact of the US Inflation Reduction Act (IRA), which pays subsidies only to US-made electric vehicles, will appear from the first half of next year.
According to the Hyundai Motor Group on the 2nd, sales of the Ioniq 5 last month were 1,191 units, down 24.6% from October (1,579 units). EV6 sales were 641 units, down 46% from October (1186 units). Sales of the Ioniq 5 peaked at 2853 units in June of this year, and declined sharply from July (1978 units). EV6 also peaked in March this year (3156 units), and since then, the decline has continued.
The company explained that the IRA had little effect on this decline in sales. An official from Hyundai Motor Group said, “Many of the electric vehicles sold in the US are contracted before the implementation of the IRA and are not subject to subsidies.”
The IRA puts conditions on electric vehicle subsidies. Electric vehicles must be produced in North America, and raw materials for batteries must be produced or processed at a certain rate in the United States or in countries that have signed free trade agreements (FTAs) with the United States. Since Hyundai Motor Group produces most of its electric vehicles in Korea, US customers cannot receive subsidies. The Hyundai Motor Group will begin production of electric vehicles in the US state of Georgia from the first half of 2025.
As the aftermath of the IRA is expected to begin in earnest from the first half of next year, it is pointed out that countermeasures are urgently needed. Hyundai Motor Group is closely monitoring the situation, reporting that the impact of the IRA could be felt more quickly. The Ministry of Trade, Industry and Energy submitted the second IRA opinion to the U.S. Treasury Department on the same day. They demanded that the scope of application be expanded and interpreted so that Korean companies can make the most of the commercial eco-friendly vehicle tax credit. The first opinion last month included requests for a plan to defer the application of the tax credit standard for eco-friendly vehicles for three years.