Import auto brands have been mostly circumspect about how the new Inflation Reduction Act will impact their efforts to market electric vehicles in the U.S. Steve Center, COO of Kia America, is a bit more blunt. The law pulls the rug out from the entire industry, he said.
“To have anything just changed ‘presto change-o’ is very disruptive to everybody,” Center told Automotive News at the Los Angeles Auto Show this month.
“You have the whole industry aggressively developing and getting ready to manufacture electric cars … and you go in, you change it and it disrupts everybody’s planning,” he said.
Enacted in August, the IRA requires that to qualify for a $7,500 tax credit, an EV and its battery must be assembled in North America and certain battery materials must be sourced or processed in North America.
Hyundai Motor Group’s three brands — Kia, Hyundai and Genesis — each has made robust plans to build and sell EVs in the U.S. They have launched popular EVs into the market ahead of many domestic brands and have more in the queue. The group is the No. 2 seller of EVs behind Tesla, accounting for 9.4 percent share of the EV market, according to Experian Automotive. But the Inflation Reduction Act is a challenge now.
“We’re going to make the cars and there’s a certain cost given the technology maturity and scale that we’re at today,” Center said. “So it makes things very difficult for us to comply with both what we want to do and the aspirational objectives of the government.”
He said as the market begins to look beyond early adopters to target more mainstream consumers, the limited list of vehicles eligible for the tax credit will have a “detrimental impact.”
“The dollars are a little more dear to the [middle part of the market],” Center said. “And there’s only so much discounting a manufacturer can do.”
In May, Hyundai Motor Group committed $5.54 billion to build an EV manufacturing complex near Savannah, Ga., including plans for a battery plant built through a joint venture with a still-unnamed partner. Construction of the plant is under way, but the vehicles slated to be built there will not be eligible for the tax credit until March 2026.
“We are going forward, but they’re just making it a lot harder,” Center said.
