Summary
-Industry leader feels eliminating EV tax credit would hurt auto industry investments and sales
– Electric vehicle tax credit could disrupt job creation and U.S. car business trajectory
– Potential threat of losing EV tax credits hangs over Kia’s plans for new U.S.-made electric vehicles
– Impact of eliminating EV tax credit not expected to be doomsday scenario, but would hurt
– Suggestions to gradually eliminate EV tax credit if necessary to avoid hurting the industry
Article
Potential Threat to EV Sales
Kia and Hyundai Motor Group are facing a potential threat of losing the electric vehicle tax credits in the US, which could disrupt the trajectory of the American car business. Senior Kia executives have expressed concerns over President-elect Donald Trump’s plan to eliminate the EV tax credit, as it could be detrimental to jobs and the overall industry.
Investments in US-Made EVs
Kia has heavily invested in bringing manufacturing of its EV6 and EV9 electric models to Georgia, aiming to comply with the $7,500 purchase incentive’s North American assembly requirement. Hyundai is also planning to introduce US-made electric cars like the Ioniq 5 and Ioniq 9. The companies have adjusted their supply chains to meet restrictions around battery and component sourcing for qualifying vehicles.
Impact on the Auto Industry
The potential elimination of the EV tax credit could result in a drop in demand for electric cars, which would be disruptive to an industry that has invested significant money and long-term plans into electrification. Various analyses have shown that without the incentive, the demand for EVs would decrease, affecting the industry’s sustainability in the long run.
Republican Efforts
The Inflation Reduction Act, which included the latest revision to the EV tax credits, has supported job creation and environmental initiatives. The Republican effort to attack the act is seen as primarily ideological, and Kia’s COO believes it to be bad policy that could harm the biggest industry in the country.
Trump Administration’s Plans
The Trump transition team is reportedly considering eliminating the EV tax credit as part of broader tax reform, causing concern in the EV industry. The move aims to encourage demand for battery-powered cars and reduce reliance on Chinese battery supply chains. However, it remains to be seen how Congress will respond to this proposal.
Future of EV Sales
While the elimination of the EV tax credit could hurt EV sales, it may not be a doomsday scenario as some customers are still purchasing and leasing electric vehicles. Kia, currently ineligible for the purchase credit, plans to introduce models that qualify. Factors like household income requirements and charging infrastructure also play a significant role in EV adoption. Kia’s COO suggests a gradual ramp-down if the tax credit is to be eliminated completely.
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