Hyundai breaks ground on $5.5 bln U.S. EV, battery plant

ELLABELL, Ga., Oct 25 (Reuters) – Hyundai Motor Co (005380.KS) inaugurated a $5.54 billion electric vehicle (EV) and battery factory in the United States on Tuesday, as South Korea’s largest automaker grapples with an uncertain outlook for its electric vehicle sales on its main market.

The investment is the largest in state history and the latest in a string of electric vehicle and battery announcements in Georgia.

Hyundai plans to begin commercial production in the first half of 2025 at the massive Bryan County plant, about 30 miles west of Savannah, which will have an annual capacity of 300,000 units.

Georgia Governor Brian Kemp, a Republican, and the state’s two U.S. Senators, Jon Ossoff and Raphael Warnock, both Democrats, attended the event and all hailed the investment which will eventually create 8,100 jobs . Kemp and Warnock are re-elected next month.

Kemp said that since 2020, Georgia has announced 30 electric mobility-related projects that will ultimately result in $13 billion in investment and nearly 19,000 jobs. In December, electric vehicle maker Rivian Automotive Inc announced it would invest $5 billion in the state.

The inauguration comes amid anger in Korea and the European Union over US tax policy on electric vehicles.

The Cut Inflation Act signed by President Joe Biden in August requires electric vehicles to be assembled in North America in order to qualify for US tax credits. Hyundai and its subsidiary Kia Corp as well as major European automakers have been excluded from subsidies for electric vehicles because they do not yet manufacture the vehicles there.

Korea’s Ambassador to the United States, Taeyong Cho, told reporters that discussions were ongoing on the tax issue between the Biden administration and the Korean government. He said it was unclear whether the law would need to be changed by the US Congress or if it could be dealt with through the regulatory process.

The law made about 70% of electric vehicles immediately ineligible for tax credits of up to $7,500 per vehicle.

Sales of the Hyundai Ioniq 5 crossover SUV in the United States fell about 14% in September from the previous month, hit by the new American law.

Concerns over Hyundai’s electric vehicle sales in the United States under new regulations were cited by analysts when the company reported its quarterly results on Monday.

Biden offered assurances in a letter to South Korean President Yoon Suk-yeol, who last month asked the US president to help ease Seoul’s fears that new US rules would hurt South Korean automakers .

Following the August law, only around 20 electric vehicles are eligible for subsidies under the new rules, including models from Ford Motor Co. (FN) and BMWs (BMWG.DE).

Reporting by David Shepardson in Ellabell, Ga. Editing by Muralikumar Anantharaman and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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