The ‘new car effect’ has decreased since July
Ministry of Industry, 2nd Opinion of the IRA to the United States
Sales of Hyundai Motor Group’s electric vehicles in the United States, such as Hyundai Motor’s Ioniq 5 and Kia’s EV6, have been in steep decline since last July. The new car effect is analyzed to be mainly due to the reduced supply volume, but the effect of the US Inflation Reduction Act (IRA), which only pays subsidies to electric vehicles made in the US, is also predicted to appear from the first half of next year.
According to the Hyundai Motor Group on the 2nd, sales of the Ioniq 5 last month were 1,191 units, down 24.6% from October (1,579 units). EV6 sales were 641 units, down 46% from October (1186 units). Sales of the Ioniq 5 peaked at 2853 units in June this year, and fell sharply from July (1978 units). EV6 also peaked in March this year (3156 units), and since then, the decline has continued.
The company explained that the IRA had little effect on this drop in sales. An official from Hyundai Motor Group said, “Many of the electric vehicles sold in the United States have been contracted before the implementation of the IRA and are not subject to subsidies.”
The IRA imposes conditions on electric vehicle subsidies. Electric vehicles must be produced in North America, and raw materials for batteries must be produced or processed at a certain rate in the United States or in countries that have signed free trade agreements (FTAs) with the United States. Since Hyundai Motor Group produces most of its electric vehicles in Korea, US customers cannot receive subsidies. Hyundai Motor Group will begin production of electric vehicles in the US state of Georgia from the first half of 2025.
As the IRA results are expected to begin in earnest from the first half of next year, countermeasures are urgently needed. Hyundai Motor Group is monitoring the situation closely, reporting that the impact of the IRA could be felt more quickly. The Ministry of Commerce, Industry and Energy submitted the IRA’s second opinion to the US Treasury Department on the same day. They demanded that the scope of the application be expanded and interpreted so that Korean companies can make the most of the commercial eco-friendly vehicle tax credit. The first opinion last month included requests for a plan to delay the application of the tax credit standard for environmentally friendly vehicles for three years.