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Korea to review WTO complaint on Biden’s IRA

Ioniq 5 (Hyundai Motor)
Ioniq 5 (Hyundai Motor)

The South Korean government will review launching a complaint to the World Trade Organization over a new US bill regarding tax credits that immediately scrapped subsidies for electric vehicles made outside the US, South Korean Industry Minister Lee Chang-yang said Monday.

Last week, US President Joe Biden signed the $430 billion Inflation Reduction Act, which would allow up to $7,500 of tax credits for “Made in US” EVs only, as part of the scheme to lift the portion of eco-friendly vehicles to 50 percent of all car sales in the local market by 2030.

“As soon as the IRA had been decided, we delivered our concerns to the head of the United States Trade Representative regarding possible breaches of WTO rules and the US-Korea Free Trade Agreement,” Lee said during a parliamentary session when asked by the ruling People Power Party lawmaker Lee In-seon about his view on whether the new bill breaches WTO rules.

“We have been conveying our situation through various routes, including our foreign minister (to the US), and we will send our trade representative to convey our willingness to continue our talks with the US representative,” he said, adding that Trade Minister Ahn Duk-geun plans to discuss the matter during his trip to Washington next week.

South Korean carmakers’ ambitious green push has hit a snag in the all-important US market, at a pivotal moment when Hyundai and Kia became the second-largest EV makers in the US, with a combined 27,000 units sold in the January-May period after Tesla, the world’s bestselling EV brand.

The Korea Automobile Manufacturers Association, of which Hyundai Motor and Kia are members, has also sent a letter to the US House of Representatives, requesting that the US include EVs and battery components manufactured or assembled in South Korea on the list of those eligible for US tax benefits, citing the US-Korea FTA.

As Hyundai Motor and its smaller affiliate Kia have not yet secured production facilities for EVs in the US, a strategic shift is unavoidable for the carmaker’s new launches next year in the North American market -- including for the Ioniq 6 and the EV9, the successors of its popular EVs.

Industry sources said Monday that Hyundai Motor Group is mulling bringing forward the opening of a $5.5 billion plan to build EV and battery manufacturing facilities in the US state of Georgia towards the end of 2022. 

The original plan for the plant, with an annual production capacity of some 300,000 vehicles, was expected to break ground next year and start production no earlier than the first half of 2025. 

If the early construction of the Georgia plant goes forward, mass production can start as early as the second half of 2024, considering that it takes an average of two years to construct an EV factory. 

The carmaker could start producing a full-electric version of the Genesis GV70 luxury SUV at its existing Alabama plant from October, but the effect will be limited, considering its top-selling Hyundai Ioniq 5 and Kia EV6 will be produced in South Korea for some time. 

Largely buoyed by robust EV sales, the Korean automotive duo also ranked third globally in car sales by selling 3.29 million vehicles in the first half of this year, a first for the nation’s largest carmaker.

By Kim Da-sol (
catch table
Korea Herald daum