Washington to gather feedback for EV subsidy guidance

Having signed the Inflation Reduction Act (IRA) to restrict the eligibility of EV subsidies to North American manufacturers, the Biden administration is entering a process of gathering opinions to devise guidance for IRA tax credits. And the Korean government and automakers are preparing a proposal to alleviate discrimination against Korean-made vehicles.

Reportedly, Seoul has demanded to Washington that Korean electric vehicles, under the free trade agreement, and the EVs produced by Hyundai Motor for which the U.S. committed investments should be included as recipients of America’s EV subsidies.

The U.S. Department of Treasury and the IRS announced Wednesday that they will collect opinions about the tax breaks until November 4 as a due process before the enforcement of the IRA. Based on the data, the Biden administration plans to draw up a set of rules to implement the IRA, including EV subsidy payment criteria, by the end of this year.

The IRA rules include six categories: EVs, sustainable architecture, energy, security, and tax breaks. As the IRA stipulated, only the EVs finally assembled in North America should be eligible for subsidies; Hyundai Motor and Kia Motors, starting their operations of EV factories in Georgia in 2025, have been excluded from the list. In the notice, the Department of Treasury asked for an opinion on whether the terms such as “North America” and “final assembly” need to be clearly defined in the guidance.

“As a stakeholder, we will also put in its opinion,” said a South Korean government official. “We will consult with the relevant ministries and auto industry in responding to the developments.” South Korean automakers are also preparing to participate in the feedback collection.

The Treasury also requested opinions on regulating minerals used in EV batteries. The IRA only allows subsidies to the EVs equipped with batteries that contain a particular share of minerals produced in the U.S., and the countries that have signed an FTA with the U.S. A set of criteria on the country of origin and evaluation of minerals will be defined through feedback collection.

The Biden administration plans to draw up a guide to maximize the number of vehicles receiving EV subsidies under the IRA. “Some of the rules will be available to see within this year,” said John Podesta, the White House Deputy Chief of Staff, in a meeting with reporters on Wednesday, hinting at the possibility of an early announcement on the guidance.


weappon@donga.com