U.S. cancels Korean electric car subsidies: Korean government worried

The Korean government has expressed its concern to the U.S. side through several channels as Korean electric vehicles are excluded from the list of targets for tax credits under the Inflation Reduction Act.

According to forecasts, electric vehicles such as the Hyundai IONIQ 5 and Kia EV6, which are manufactured and exported in Korea, may not be eligible for the tax credit and their sales in the U.S. will be affected.

Officials at the Ministry of Foreign Affairs of the Republic of Korea pointed out that the subsidy scheme for electric vehicles proposed by the Inflation Reduction Act violates not only the Korea-U.S. Free Trade Agreement (FTA), but also WTO rules.

On the eve of the bill's passage, Hyundai Motor Co. and battery makers LG Energy Solution, Samsung SDI and SK held a joint meeting, in which the Korean companies asked the Korean authorities to support Korean companies entering the U.S. and ensure that they enjoy non-discriminatory treatment.

South Korea also sent a letter to the U.S. House of Representatives requesting that the U.S. include electric vehicles and battery components manufactured or assembled in South Korea in the scope of U.S. tax benefits, although the request was not adopted.