U.S. President-elect Donald Trump is expected to repeal subsidies for electric vehicles (EVs) and scale back support for the EV industry. The incoming Trump administration will also likely impose tariffs on battery materials imported to the United States. These proposals, if implemented, could strike a blow to Hyundai Motor Group, which recently made large-scale investments in the U.S. and South Korean battery makers.
Reuters reported on Dec. 16 that Trump’s transition team recommends sweeping changes to the Biden administration’s EV policies. The transition team has called for eliminating subsidies under the Biden administration’s Inflation Reduction Act (IRA), including a $7,500 tax credit for consumer EV purchases, according to a document seen by Reuters. The IRA was designed to support EVs equipped with U.S.-made batteries.
The transition team also recommended redirecting $7.5 billion in government funding, initially designated for building EV charging stations under the Biden administration, to other infrastructure priorities, including national defense.
Throughout his presidential campaign, Trump vowed to roll back Biden’s EV mandate and encourage the production of fossil-fuel vehicles. If these proposals are implemented, Hyundai Motor’s U.S. operations could face significant setbacks next year.
Hyundai had anticipated IRA benefits when it invested $7.6 billion last October to build Metaplant America, an EV production facility in Georgia. The facility plans to produce up to 400,000 EVs annually. But with potential policy changes undermining EV demand, Hyundai may be forced to reassess its strategy.
Hyundai had planned to produce various EV models at the Metaplant, including the Ioniq 5, Ioniq 6, the recently unveiled Ioniq 9, and the GV70 EV. While the facility can adapt its production lines to manufacture hybrid vehicles, shifting production to hybrids could trigger conflict with South Korean labor unions. The Tucson Hybrid, Hyundai’s best-selling model in the U.S., is currently made in South Korea and exported to the U.S. Allocating production to the Metaplant could be seen as reducing domestic job opportunities, sparking union pushback.
Korean battery makers, including LG Energy Solution, Samsung SDI, and SK On, will also likely feel the pinch. If the Trump administration imposes tariffs on imported battery materials, supply chains for essential battery components, such as cathodes, anodes, separators, and electrolytes, could face disruption. Many of these materials are currently imported to U.S.-based plants operated by Korean manufacturers. Key suppliers such as EcoPro BM, POSCO Future M, and L&F provide these materials to battery manufacturers.
The Trump transition team reportedly considers imposing tariffs on battery materials and then negotiating individual exemptions with allies. This method aims to block imports of Chinese-made materials while using the tariffs as leverage in trade talks with U.S. allies.
Adding to these woes, the recent impeachment of South Korean President Yoon Suk-yeol on Dec. 14 could further complicate negotiations with the U.S.
