Summary
- Kia will slow down EV9 production in the U.S. due to stricter battery sourcing rules effective in 2025
- Most EV9s in the U.S. are currently imported from Korea and use critical minerals from China
- The Hyundai Motor Group is building two battery plants in Georgia with SK On and LG Energy Solution
- The IRA prohibits sourcing battery materials from "Foreign Entities Of Concern"
- The percentage of critical minerals in EV batteries sourced from the U.S. or free-trade partners is increasing incrementally under the IRA act
Article
Kia Production Slowdown Due to Stricter EV Battery Sourcing Rules
Kia is facing a slowdown in the production of its popular EV9 model in the United States due to stricter battery sourcing rules that are set to be effective in 2025. The majority of EV9s sold in the U.S. are currently imported from Korea and use critical minerals sourced from China. However, Hyundai Motor Group, which owns Kia, is getting ready to address this issue by building two battery plants in Georgia in partnership with SK On and LG Energy Solution.
Kia EV9 Dominates in American Market
The Kia EV9 has been a standout in the American market, offering a unique electric SUV option in the $50,000-$70,000 price range. In October, the EV9 even outsold the smaller and more affordable EV6 model, showcasing the strong demand for big, family-friendly electric SUVs in the U.S. However, its production may face challenges in the future due to the impact of stricter battery sourcing rules under the Inflation Reduction Act (IRA) that will come into effect in 2025.
Impact of IRA on Kia EV9 Production
According to industry sources, the Hyundai Motor Group has reduced EV9 production at its Georgia plant due to the upcoming stricter battery sourcing rules mandated by the IRA. The Georgia plant only produced 21 EV9s in the third quarter, with just one of them being sold in the U.S. While Kia sold nearly 2,000 units of the EV9 in October in the U.S., most of these vehicles were likely manufactured in Korea. The IRA aims to restrict automakers from sourcing battery components from designated "Foreign Entities Of Concern," such as China.
Transition Towards U.S. Battery Sourcing
Under the IRA guidelines, the percentage of critical minerals in EV batteries that must be sourced from the U.S. or its free-trade partners will increase gradually. This requirement was set at 40% for EVs entering service before January 1, 2024, and is expected to reach 80% by 2027. To comply with these regulations, Hyundai Motor Group is constructing two battery plants near the Metaplant in Georgia in partnership with SK On and LG Energy Solution. These facilities are expected to support the production of hundreds of thousands of EVs annually.
Future of EV Production under New Administration
The future of EV production and incentives in the U.S. may undergo changes with the incoming administration. With President-elect Donald Trump set to take office, there is uncertainty surrounding the continuation of manufacturing incentives for EVs and EV-related components. While the $7,500 consumer credits for EVs are likely to be scrutinized, it remains to be seen how the new administration will approach policies that impact the electric vehicle industry. The fate of Kia’s EV9 production and the overall electric vehicle market in the U.S. could be influenced by these upcoming developments.
Conclusion
The Kia EV9’s production slowdown in the U.S. due to stricter battery sourcing rules highlights the challenges faced by automakers in complying with evolving regulations. Hyundai Motor Group’s initiatives to establish battery plants in Georgia reflect a strategic shift towards local sourcing of critical minerals to meet future requirements. The impact of the IRA on EV production, combined with potential policy changes under the new administration, will shape the landscape of the electric vehicle market in the coming years. As Kia and other automakers navigate these changes, innovation and adaptation will be key to remaining competitive in the evolving electric vehicle industry.
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