Chung Euisun, executive chair of Hyundai Motor Group, came home after a two-week trip to the United States without any solutions to the problems caused by the most recent tax credit law passed in the United States, which eliminated incentives for electric cars built in other countries. According to those with knowledge of the market, however, there is no space for enterprises to handle the problem, and it is a topic that relies greatly on the strategic approach taken by the government.
According to industry experts who were quoted in local media on Monday, Chung visited New York, Los Angeles, Boston, and Georgia. The purpose of this trip was not only to discuss measures regarding the axed subsidies for environmentally friendly cars made in South Korea with local experts, including executives, but also to inspect its facilities in the United States and new opportunities for business.
The chairman of Chung’s company, who is known for keeping unusually full schedules, recently travelled to New York to meet with authorities connected to the investigation into the IRA. It has been claimed that Hyundai Motor Group has abandoned plans to go to Washington, D.C. due to the fact that officials from the South Korean government are now in the city.
Chung took a flight to Los Angeles in the middle of the trip to check on the status of the local sales. The headquarters of the American branch of the Korean automobile manufacturer may be found in Irvine, which is situated southeast of Los Angeles.
Chung has also been to Georgia, the location of the electric vehicle manufacturing facility that Hyundai plans to construct there at a cost of $5.5 billion, with the goal of beginning mass production of around 300,000 vehicles annually during the first part of the year 2025.
After that, he made a trip in Boston, where, according to sources inside the sector, he may have reviewed recent developments in robotics with Marc Raibert, the founder and chairperson of Boston Dynamics. In June of the previous year, Hyundai Motor Group paid $1.1 billion to purchase the mobile robot startup based in the United States. Most recently, Boston Dynamics was successful in closing a transaction for $10 million with NFI Industries, one of the top three logistics companies in the United States, to sell their truck-unloading system robot Stretch.
In response to the $430 billion Inflation Reduction Act that was signed into law by the Biden Administration last month and that would allow up to $7,500 of tax credits for “Made in US” EVs only, Hyundai is even considering bringing forward the construction schedule of its first electric vehicle (EV) factory in the United States to the end of this year, moving it up from 2023.
According to the opinions of industry professionals, Hyundai may consider reducing the pricing of its vehicles or providing promotional incentives that are comparable to the subsidies provided to electric vehicles built in the United States.
In spite of these attempts, market analysts argue that the only obvious option to settle the problem is dependent on the strategic approach that the South Korean government takes to engage with the government of the United States.
“If I’m being really honest, there isn’t much that businesses can do to change the existing state of affairs. “For the time being, the companies are watching what the US authorities or the related associations will do when the South Korean representatives visit them to convey Korean carmakers’ concerns,” said an industry insider who declined to be named due to the sensitivity of the issue. “For the time being, the firms are eyeing what the US authorities or the related associations will do.”
The results of a study on corporate knowledge of risks in global supply chains that was conducted by the Federation of Korean Industries and published in July indicated that just six percent of companies stated they are prepared with tangible actions to address the supply chain hazards. Forty-four percent of respondents stated that they are now debating the issue, while thirty-five and a half percent of respondents said that they would look into measures in the future. A little under one fifth of respondents claimed they do not have any plans to look into the matter.
According to Professor Kim Pil-soo of automotive engineering from Daelim University, “the government should play a role to adjust issues between governments and come up with measures and policies to support local firms” in order to reduce the amount of unpredictability and risk that is posed to companies along their global supply chains.
In the meanwhile, the government said on Monday that Trade Minister Ahn Duk-geun has left for the United States to meet with government officials and members of Congress in that country. Among those officials and members of Congress is the Trade Representative Katherine Tai. This visit by Ahn comes just a few days after South Korean officials travelled to the United States capital.
According to the government, Ahn will relay the fears of local automakers that they may lose ground in the US market as a result of their production of electric vehicles at domestic factories for export.