Last week a Hyundai Motor executive spoke about the Biden administration’s recent decision to eliminate tax credits for imported electric vehicles. The elimination of tax credits is expected to significantly impact the automaker’s business.
In particular, it puts Hyundai at an unfair disadvantage against American electric vehicle manufacturers, who will still be eligible for the tax credits. These companies can produce their vehicles domestically and benefit from government incentives that Hyundai cannot access.
Additionally, the executive highlighted the company’s commitment to investing in environmental sustainability and voiced hope that future policies would seek to support rather than hinder this effort. The elimination of these tax credits ultimately serves as a significant blow to Hyundai Motor’s success in the growing imported electric vehicle market.
The Inflation Reduction Act
The Inflation Reduction Act, signed into law earlier this recently, has already significantly impacted the electric vehicle market. One of its provisions eliminates the tax credit of up to $7,500 for electric and plug-in hybrid vehicles, which are imported and are currently being sold in the U.S., a move expected to affect the sales of these types of cars significantly.
The tax credit, introduced as part of the Energy Improvement and Extension Act of 2008 to incentivize the purchase of environmentally-friendly vehicles, had been gradually phased out for individual automakers once they reached 200,000 electric vehicle sales. This new provision eliminates it for imported vehicles. While domestic manufacturers, such as Tesla and General Motors, will still be eligible for the credit until they reach the set sales limit, many industry experts say this move could significantly hurt competition in the market and lead to slow growth in the adoption of electric vehicles.
The Inflation Reduction Act also includes provisions to reduce federal spending and balance the budget. It remains to be seen what impact this decision will have on sales and the future of electric vehicles in the U.S. market.
The Imported Electric Vehicle Market in The United States
Hyundai and its sister company Kia have quickly climbed to the top ranks of electric vehicle sales in the U.S. In just the first quarter of 2019, they sold over 14,000 EVs and now hold the title of the second best-selling automaker in this growing market.
This impressive feat is primarily due to their new line of long-range electric vehicles, including the Kona Electric SUV and the Niro EV crossover. Those two models offer a range of 258 and 239 miles on a single charge. However, the industry leader, Tesla’s flagship Model S surpasses both and offers a range of 405 miles.
In addition to leading EV sales, Hyundai has also made strides in sustainability with its commitment to reducing carbon emissions by 50% by 2050 and working towards a future where all cars sold will be electric or hydrogen fuel cell vehicles by 2040. With such dedication to green technology, it’s no surprise that Hyundai and Kia are set to make a mark as frontrunners in the electric vehicle market. However, eliminating tax credits on imported electric vehicles has raised concerns for Hyundai in the US market.
The company has said it was considering options to qualify for the tax credits, including establishing manufacturing relationships in the US.