Hyundai Motor, US Market Share at 11% 'Best Year' Ahead... IRA Poses a 'Test'

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As Hyundai Motor Group is being evaluated to have reserved the 'best year' this year since entering the U.S. market in 1986, CNBC reported on the 23rd (local time) that the tax credit discrimination due to the implementation of the U.S. Inflation Reduction Act (IRA) will act as a future test.

CNBC cited market research firm LMC Automotive, reporting that Hyundai Motor Group, combining Hyundai Motor, Kia, and Genesis, is expected to hold a 10.7% share of the new car market in the U.S. this year. CNBC stated that this is the best performance since entering the U.S. market in 1986. In particular, it ranked second in the U.S. electric vehicle market in the third quarter, following Tesla, and is expected to be among the top in the electric vehicle sector on an annual basis this year.

Hyundai Motor Group is expanding its presence in the U.S. electric vehicle market with the Ioniq 5 and EV6. CNBC introduced that large sport utility vehicles (SUVs) such as the Kia Telluride and Hyundai Palisade have been among the most in-demand vehicles in the U.S. since their launch in 2019. The earlier entry of the luxury brand Genesis in 2015 is evaluated to have helped the market entry of electric vehicles and large SUVs thereafter.

Jake Fisher of Consumer Reports, a U.S. consumer media outlet, told CNBC, "When Hyundai and Kia first entered the U.S., they were only evaluated as cheap, but over time, they have risen from 'cost-effective cars' to 'very competitive cars.'"

In fact, Hyundai's growth speed in the U.S. market surpasses competitors. Japanese Toyota, which entered the U.S. in 1957, surpassed the 10% market share mark in 2002 after 45 years, but Hyundai Motor achieved double-digit market share for the first time last year, 10 years ahead of Toyota.

However, CNBC diagnosed that it is questionable whether Hyundai Motor Group can continue its growth trend in the U.S. market going forward. This is because the Biden administration's implementation of the IRA inevitably has a direct impact on the electric vehicle sector. Competing U.S. electric vehicles such as Tesla, Ford, and General Motors (GM) can secure government tax credit benefits, putting Hyundai at a disadvantage.

Regarding this, Hyundai Motor CEO Jang Jae-hoon expressed concern about the exclusion from tax credits in an interview with CNBC at the groundbreaking ceremony of the electric vehicle plant in Georgia last month, calling it a "very difficult issue." He said, "In the short term, the IRA will bring some constraints to our customers' choices," but added, "In the long term, we have a very solid plan. We will be competitive."

Earlier, Hyundai Motor held a groundbreaking ceremony for a dedicated plant capable of producing 300,000 electric vehicles annually in Georgia, U.S., on the 25th of last month. This plant is scheduled to be completed in 2025 and will begin full-scale mass production of electric vehicles for the three brands: Hyundai Motor, Kia, and Genesis.