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Photo courtesy of: Hyundai Motor Group |
[Alpha Biz= Kim Jisun] The newly enacted “One Big Beautiful Bill Act (OBBBA),” a major tax reform law spearheaded by former U.S. President Donald Trump, is expected to significantly impact South Korean electric vehicle (EV) and battery manufacturers, particularly Hyundai Motor Group, according to a report released by the Korea Economic Research Institute (KERI) on July 20.
The report, titled “Impact and Implications of the Trump Tax Cut Act on the U.S. Automotive and Battery Industry,” estimates that Hyundai Motor Group could see a reduction of up to 45,828 units in annual EV sales in the U.S., equating to approximately 2.72 trillion Korean won (about $2 billion USD) in lost revenue.
The OBBBA repeals the clean energy incentive programs established under President Joe Biden’s Inflation Reduction Act (IRA), including the EV purchase tax credit, which had been scheduled to run through the end of 2032. Under the new law, the tax credit will now end as early as September 2025.
Drawing on analysis from the U.S.-based National Bureau of Economic Research (NBER), the report projects that the termination of EV tax credits could reduce sales for automakers with U.S. production facilities, such as Hyundai, by up to 37%.
Furthermore, the report warns that Korea’s three major battery makers — LG Energy Solution, Samsung SDI, and SK On — may face profitability challenges. Many of their U.S. production operations are joint ventures with automakers and were planned with the IRA tax incentives in mind.
To mitigate the adverse effects and maintain industry competitiveness, KERI recommends rapid passage of legislative measures, including the Korea Development Bank Act revision that would establish a 50 trillion KRW “Advanced Strategic Industry Fund” with state-backed bond guarantees. The report also calls for targeted fiscal support and tax reforms, such as refundable R&D tax credits and expedited fund deployment to bridge the impact of lost U.S. incentives.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
