[Biden Era] 5 Days Until Biden Administration Launch... How Are Domestic Companies Responding by Industry?

[Asia Economy Reporter Suyeon Woo] With the inauguration of the U.S. Joe Biden administration just 5 days away, domestic companies are accelerating the reorganization of their strategies for entering the U.S. market. As new opportunities expand in eco-friendly vehicles, renewable energy, and infrastructure sectors under the Biden administration's Green New Deal policy, the administration's active manufacturing promotion policies are increasing pressure on investment and production within the U.S., complicating the calculations for Korean companies.

President-elect Joe Biden of the United States

Benefits for Eco-Friendly Industries such as Electric Vehicles and Renewable Energy

Eco-friendly industries such as eco-friendly vehicles, renewable energy, and smart cities are expected to fall directly under the influence of the Biden administration's 'Green New Deal' policy. First, the Biden administration is expected to focus on promoting eco-friendly vehicle adoption by actively pursuing the introduction of zero-emission vehicle sales mandates, expanding charging infrastructure, and promoting the distribution of hydrogen fuel cell vehicles.

In response, Hyundai Motor Group has taken multifaceted measures, including expanding its eco-friendly vehicle lineup in the U.S. and pursuing export contracts for hydrogen fuel cell trucks. Hyundai plans to increase the number of eco-friendly vehicle models sold in the U.S. to 10 by 2022 and is discussing large-scale hydrogen fuel cell truck exports with local companies to enter the U.S. eco-friendly commercial vehicle market.

Domestic battery companies, another pillar of the electric vehicle industry, are also entering the U.S. eco-friendly vehicle market by increasing battery supply to local automakers. LG Energy Solution has established a joint venture with GM and started developing next-generation high-efficiency batteries capable of driving 1,000 km on a single charge, while expanding electric vehicle battery supply centered on Tesla, the world's number one electric vehicle company.

May Kai, GM Lab Group Manager, is explaining the Ultium battery platform being developed in collaboration with LG Energy Solution at CES 2021. Photo by GM

In the energy sector, renewable energy fields such as solar power, wind power, and energy storage systems (ESS) are gaining attention. The Biden administration has pledged to install 8 million solar roofs, 500 million solar panels, and 60,000 wind turbines by 2035.

The industry is focusing on Hanwha Solutions, the leading company in the U.S. solar module market. Last month, the company announced plans to secure investment funds through a capital increase worth 1.2 trillion KRW to expand costs for developing next-generation solar products and acquiring power generation assets. In the ESS sector, Hanwha Energy secured a 1.1 GWh ESS project in the U.S. in the second half of last year, and Samsung SDI resumed ESS supply to Tesla from the fourth quarter.

ICT and Semiconductors Brighten with 5G Tailwind... Challenge to Overcome Changes in U.S. GVC

With the Biden administration unveiling plans to build a 5G communication network for all Americans, domestic ICT companies have new opportunities to explore in communication network construction, equipment exports, and new service development.

The semiconductor industry expects that the trade policy of containing China, initiated during the Trump administration, will continue under the Biden administration, increasing uncertainty across the industry. The U.S. is expected to exclude China from advanced technology sectors such as semiconductors, artificial intelligence (AI), and quantum computing, and build a U.S.-centered global supply chain.

However, as the Biden administration promotes policies encouraging the purchase of American-made products and regional manufacturing production, the burden on Korean companies operating in the U.S. is also expected to increase. The U.S. Congress has already introduced various incentive bills, including a $10 billion federal subsidy program encouraging the establishment of semiconductor manufacturing facilities within the region.

Hyundai Motor Alabama Plant Production Line / Photo by Hyundai Motor

The automotive industry must increase the proportion of locally produced parts to 75% to qualify for tariff-free treatment under the USMCA (United States-Mexico-Canada Agreement), which came into effect in July last year. Hyundai recently began producing its main U.S. sport utility vehicle (SUV), the Tucson, at a U.S. factory for this reason.

A KOTRA North America regional office official advised, "Our companies need to prepare in advance for uncertainties caused by the U.S. 'Buy American' policy," adding, "They should strengthen cooperation with state and local governments and overcome U.S. protectionism through localization strategies and joint entry into construction, products, and services."