Down 14% and 22% Respectively Compared to Last Month
Total Sales Including Internal Combustion Engines Increase
[Asia Economy Reporter Kiho Sung] The impact of the U.S. Inflation Reduction Act (IRA), which eliminated tax credit benefits for foreign electric vehicles, is becoming a reality. Despite our government's active expression of concern, the U.S. has not provided a clear response regarding the IRA. This has raised concerns that difficulties for our companies may be prolonged.
According to Hyundai Motor America (HMA) on the 4th, since the full implementation of the IRA, Hyundai Motor Group's electric vehicle sales in the U.S. significantly declined in September compared to the previous month.
In September alone, 1,306 units of the electric vehicle Ioniq 5 were sold. This is 211 units (14%) less than the 1,517 units sold in August. It is also more than a 30% decrease compared to 1,984 units sold in July (including Ioniq models).
Kia's electric vehicle EV6 also sold 1,440 units in September, which is 400 units (22%) less than the 1,840 units sold in August. The EV6 had sold 1,716 units in July.
Both Hyundai's Ioniq 5 and Kia's EV6 are produced in Korea and exported to the U.S., so they were excluded from the subsidy eligibility under the IRA, leading to anticipated export setbacks.
The IRA is a law aimed at addressing climate change and fiscal deficit issues, providing up to $7,500 (approximately 10 million KRW) in tax credits only for electric vehicles that are finally assembled in North America. Hyundai and Kia have the second highest electric vehicle market share in the U.S. after Tesla, as their dedicated electric and eco-friendly models are recognized for product quality and cost-effectiveness. Since local production plants capable of manufacturing electric vehicles are expected to be operational no earlier than the second half of the year after next, until then, the companies must either bear sales incentives exceeding the tax credit amount themselves or endure significant sales disruptions.
However, the Biden administration is promoting the IRA as a major legislative achievement ahead of the November midterm elections. Because of this, the impact on Hyundai and Kia is likely to worsen for the time being. Hyundai, which is building an electric vehicle plant in Savannah, Georgia, is expected to complete the plant in 2025, so if the current IRA remains in effect, benefits will only be available after 2025.
Meanwhile, unlike the electric vehicle situation, the total number of vehicles Hyundai and Kia sold in the U.S. market in September continued to increase compared to the same month last year.
Hyundai sold 59,465 units in the U.S. last month, an 11% increase compared to the same period a year ago. The Tucson was the best-selling model with 12,971 units, a 31% increase, and the Santa Fe sold 9,192 units, up 40%. The cumulative sales for the third quarter reached 184,431 units, a 3% increase compared to the same period last year, marking the highest performance for a third quarter.
Kia sold 56,270 units in September, a 6% increase compared to the same month last year, marking the highest September sales ever. Sales from July to September (184,808 units) also recorded the highest third-quarter sales ever. The Sportage was the most popular model, selling 12,412 units, an 88% increase from last year, and the Sorento also increased by 79%, selling 7,350 units.
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