Hyundai, Kia less dependent than rivals on EV tax credits in US: study

An automotive industry study has found that American buyers of Hyundai Motor and Kia electric vehicles are less likely to have chosen the Korean EVs based on the US government’s tax benefits, raising hopes for the Korean automakers as they gear up for a second Donald Trump administration next year.

According to a study published by US auto industry research firm J.D. Power last week, only 32 percent of Hyundai buyers and 24 percent of Kia buyers selected tax credits and incentives as a primary reason for their selection. Toyota EV buyers were least affected with just 21 percent of them picking tax credits as a reason for selecting the brand.

In contrast, 81 percent of Volkswagen buyers, 77 percent of Chevrolet buyers and 72 percent of Tesla buyers picked the government’s financial support under the Inflation Reduction Act as the most frequently selected reason for their EV purchases.

The IRA, which is aimed at incentivizing local production and clean energy, offers up to $7,500 in government tax credits for a new EV purchase or lease if the car’s manufacturing process and components meet certain standards bolstering US production and its allies’ supply chains.

J.D. Power’s study showed that consumers purchasing or leasing a new EV in 2024 saved $5,124 on average with federal EV tax incentives, up almost 20 percent from the previous year.

As President-elect Trump has openly declared that he will end the “EV mandate” and his transition team has reportedly been planning to wipe out the Biden administration’s $7,500 federal clean vehicle tax credit, once he takes office in January, the US Alliance for Automotive Innovation suggested that ending the EV tax credits would harm the auto industry. Hyundai and Kia are both members of the Alliance for Automotive Innovation.

“To remain successful and competitive, the auto industry needs a stable and predictable regulatory environment,” the Alliance for Automotive Innovation wrote in a letter to Trump on Nov. 12.

“Provisions in the tax code support the development of next-generation automotive technologies, including EVs, in the US. These incentives have fueled investment in domestic EV and battery manufacturing and increased good-paying jobs in automotive communities across the industrial base.”

Jose Munoz, Hyundai Motor’s newly appointed and first non-Korean CEO, told reporters during the AutoMobility LA 2024 last month that the Korean automaker did not build its US investment plans based on government incentives, explaining that Hyundai could do better even if the IRA gets wiped out.

“We will not only produce EVs but also hybrids and extended-range EVs at our plants, and therefore, the key for us is flexibility and then being able to adjust to what the customers want,” he said.