Hyundai, a prominent automaker, has been capitalizing on the transition to electric vehicles (EVs) in the United States, displaying a strong commitment to the industry. The company has witnessed a surge in EV leases as buyers leverage the tax credits offered under the Inflation Reduction Act (IRA).
In April, following the implementation of new IRA guidelines, electric models that were assembled or sourced battery minerals from outside the US or its free trade partners lost their eligibility for tax credits. This change in regulations posed a potential challenge to Hyundai’s strategy, despite the success they achieved in the past year with the IONIQ 5 and EV6, which became the best-selling non-American EVs.
Hyundai had expressed its opposition to these restrictions, particularly after initiating the construction of its first dedicated EV plant in the US, which is scheduled to commence operations in 2025. However, a recent update from the Internal Revenue Service (IRS) has provided a ray of hope. It states that foreign-assembly models can bypass the law if they are leased instead of being purchased outright. Leases are interpreted as commercial business under the law, making them eligible for the $7,500 tax credit.
Recognizing the significance of this development, several automakers, including Ford, Hyundai, Kia, Mercedes, and Volkswagen, have announced their intention to pass the lease incentives on to customers. This move aims to reduce the cost of EV ownership and stimulate sales.
Jose Muñoz, CEO of Hyundai and Genesis North America, as well as the COO of Hyundai Motor Company, shared insights on how the IRA bill has impacted their business in a conversation with Automotive News. He emphasized Hyundai’s support for the US’s electrification policy, stating that the company remained committed to electric mobility. They have set a target of launching 17 electric models by 2030, with 11 models from Hyundai and 6 models from Genesis. Muñoz further expressed satisfaction that the IRA still allows consumers to benefit from the $7,500 tax credit through EV leases. Notably, Hyundai has seen a significant increase in EV leases, which have risen from 5 percent to about 30 percent since the beginning of the year.
According to Muñoz, to achieve the US’s goal of attaining a 67% EV market share by 2032, it is vital for other original equipment manufacturers (OEMs) like Hyundai to contribute significantly. The target is to reach over 11 million EV sales, accounting for 67% of a 17 million-unit market.
Hyundai is continuing to strengthen its EV supply chain in the United States. Recently, the company unveiled plans for a new EV battery cell manufacturing plant in Savannah, Georgia, in partnership with LG Energy Solution. This plant, known as Metaplant America, will further enhance Hyundai’s presence and capabilities in the US EV market.
As the US EV market undergoes regulatory changes, Hyundai remains poised to seize opportunities and contribute to the nation’s ambitious goals. The company’s dedication to electrification, increased focus on EV leases, and ongoing investments demonstrate its commitment to shaping the future of sustainable transportation.