Hyundai Motor Group’s manufacturing facility in Georgia produced 21 EV9s in the third quarter and only one was sold in the US. — Bloomberg
SEOUL: Hyundai Motor Group affiliate Kia is reportedly scaling back US production of its ambitious EV9, a large all-electric sport utility vehicle (SUV), due to stricter Inflation Reduction Act (IRA) regulations.
According to industry sources last Sunday, Hyundai Motor Group’s manufacturing facility in Georgia, which began operation last month, produced 21 EV9s in the third quarter and only one was sold in the US.
Given that the EV9’s monthly sales volume is approximately 1,800 units, the US production constraints are impacting the sales of the family SUV that made its debut in May this year.
Most EV9s sold in the United States are imported from Kia’s auto plant in South Korea.
Kia’s hesitation to boost EV9 sales comes after more stringent IRA rules, which now ban batteries produced or assembled by a Foreign Entity of Concern (FEOC).
From 2025, electric vehicles (EVs) should also avoid battery materials sourced from FEOC countries to receive the full US$7,500 subsidy.
The battery-powered SUV is equipped with battery cells from South Korean supplier SK On, manufactured in China, a country designated as a FEOC.
As a result, the EV9 only qualifies for half of the IRA tax credit.
“The EV9 is ineligible to benefit from the full IRA benefits due to the battery issue, along with other factors, including price,” said a Kia official.
EV9 prices start at US$56,395, with the GT lineup estimated to cost around US$80,000.
The IRA provides incentives for SUVs and pickup trucks priced under US$80,000.
To accelerate IRA-compliant EV sales, Hyundai Motor Group and SK On are constructing a battery cell manufacturing plant in Georgia.
Projected to have 35 gigawatt-hours annual capacity – sufficient for over 500,000 EVs – the facility is strategically located 460km and 189km from Hyundai Motor Co’s and Kia’s Georgia plants, respectively.
Hyundai Motor Group is also setting up a joint venture for a 30 gigawatt-hour capacity with LG Energy Solution in Georgia.
Despite these production adjustments, reports suggest President-elect Donald Trump’s transition team is considering scrapping the EV tax credit.
“It might be challenging for the Trump administration to repeal the IRA completely. However, reducing the EV subsidy could effectively end benefits for foreign automakers with US facilities.
“In such a scenario, Kia may need to offer additional incentives to its local dealers to boost sales,” commented Kim Pil-su, a car engineering professor at Daelim University. — The Korea Herald/ANN
