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According to reports, South Korean automaker Hyundai is working on building a $5.4 billion EV plant in the U.S., which could start producing EVs as early as 2024. The plant is expected to produce 300,000 electric cars a year. Hyundai is hoping to capitalize on the new law that will expand tax subsidies for electric cars assembled in the U.S. The Inflation Reduction Act has provisions that will prevent EV manufacturers from receiving tax breaks if they use minerals from China. The law also limits the number of EVs a manufacturer can produce in a single country, halting production for 70 percent of eligible EV models.
Price hikes on electric pickup trucks
Rivian Automotive Inc. has announced a 20 percent price increase on its electric pickup trucks. The company attributed the hike to inflation and rising component costs. The news enraged some consumers and drew the ire of Tesla Inc.’s Elon Musk. Musk tweeted that Rivian’s margins would be staggering and that the company would no longer be able to make electric pickup trucks under the price range that it originally set.
This price hike is a result of the Inflation Reduction Act that President Biden signed on Tuesday. The Act extends a $7,500 tax credit to people who buy a new electric vehicle. While the credit will help people buy an EV, it won’t cover the cost of a Hummer EV. The Hummer is above the Inflation Reduction Act’s MSRP cap.
Limits on electric sedans
The government has set new price and sales limits on electric sedans. However, some EVs are eligible until the end of the year. Those who earn $150,000 or more cannot get the credit. In addition, EVs with a higher price tag cannot be eligible until 2022. Some of these EVs will be available for purchase at lower price points. For example, Volvo is expecting to sell the S60 Recharge until the end of the year.
While the new federal tax credits will help offset the costs of EVs, many will be priced well above them. The $7,500 federal tax credit for electric vehicles will only be available to 15 models. Other challenges include the cost of building a domestic supply chain and the requirements for made-in-North America batteries. But manufacturers are confident that they can overcome these hurdles. But for now, the tax credits are only available to American buyers.
New battery technology
Despite the recent Inflation Reduction Act, which has removed EV tax breaks for those built outside the US, Hyundai plans to speed up EV construction in the U-S. to capitalize on the rising costs of labor and material. Hyundai announced in May that it would break ground on a new EV factory in Georgia in the early 2020s and begin commercial production by 2025. The company says it plans to produce 300,000 electric vehicles each year in the U.S. and will also make batteries for its vehicles.
Inflation Reduction Act also expanded the federal EV tax credit for electric vehicles assembled in the U.S. and added requirements for American-sourced materials and assembly. The new rules could accelerate Hyundai’s EV production timeline in the U-S. Hyundai has already begun building EV assembly facilities in California and Nevada, which are close to completion. However, the bill also contains provisions that prevent EV manufacturers from obtaining tax benefits if they use Chinese minerals in their production.
South Korean automakers’ interest in building factories in U.S.
With battery cell technology a major part of the new electric vehicle revolution, South Korean automakers have been lining up to build factories in the United States. This trend has sparked debate among automakers and environmental groups. The automakers are opposed to using union labor. But they do support the use of American workers in their factories. That is, at least in theory. And if the automakers don’t get unionized, it could lead to increased pollution.
Samsung is one company looking to enter the auto business, and it’s reportedly studying a joint venture with Chrysler that would start around 1990. Other Korean firms are also believed to be interested in auto production, including Dong-A Motors, which makes utility vehicles but isn’t in the car business yet. Lucky-Gold Star is another conglomerate that has no involvement in the auto business, but is trying to get into it.