LABEL, Georgia, October 25 (Reuters) – Hyundai Motor Company (005380.KS) A $5.54 billion electric car and battery factory opened in the United States on Tuesday, as South Korea’s largest automaker grapples with an uncertain outlook for its electric vehicle sales in its top market.
The investment is the largest in the state’s history and the latest in a string of electric and battery vehicle ads in Georgia.
Hyundai plans to start commercial production in the first half of 2025 at the massive plant in Bryan County about 30 miles west of Savannah, which will have an annual capacity of 300,000 units.
The event was attended by Georgia Governor Brian Kemp, a Republican, and two state senators, John Osoff and Raphael Warnock, both Democrats, who all praised the investment that will eventually add 8,100 jobs. Kemp and Warnock are about to be re-elected next month.
Kemp said that since 2020, Georgia has announced 30 electric mobility-related projects that will eventually result in $13 billion in investment and about 19,000 jobs. In December, Rivian Automotive Inc. announced that it would invest $5 billion in the state.
The groundbreaking action comes amid anger from Korea and the European Union over the US tax policy on electric vehicles.
The Inflation Reduction Act signed by President Joe Biden in August requires electric vehicles to be assembled in North America in order to qualify for tax credits in the United States. Hyundai and its subsidiary Kia Corp., as well as major European automakers, have been excluded from electric vehicle subsidies because they have not yet made cars there.
Korean Ambassador to the US Taeyong Cho told reporters that there are ongoing discussions on the tax issue between the Biden administration and the Korean government. He said it was not clear if the law needed to be changed by the US Congress or if it could be addressed through the regulatory process.
The law made about 70% of electric vehicles ineligible immediately for tax credits of up to $7,500 per vehicle.
Sales of the Hyundai Ioniq 5 crossover in the United States fell about 14% in September from the previous month, affected by the new US law.
Analysts cited concern about Hyundai’s sales of electric vehicles in the United States under the new regulations when the company announced quarterly results on Monday.
Biden offered assurances in a letter to South Korean President Yoon Seok-yeol, who asked the US president last month to help allay Seoul’s concerns that new US rules would harm South Korean automakers.
As a result of the August law, only about 20 vehicles are eligible for benefits under the new rules, including models from Ford Motor Co. (FN) and BMW (BMWG.DE).
(Reporting by David Shepherdson in Ellabell, Ga. Editing by Muralikumar Anantharaman and Matthew Lewis)
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