Partnership Gwinnett is the presenting sponsor of Global Atlanta's Korea Channel. Subscribe here for monthly Korea newsletters.
As Hyundai Motor Group broke ground on a $5.54 billion plant near Savannah, South Korea’s ambassador called for a tweak to a U.S. policy he said could “disadvantage” the very companies driving the electrified future here.
Tae-yong Cho, a veteran diplomat of more than 30 years, said he understands the complexities of politics after a two-year stint in the Korean National Assembly.
But he said that the newly passed Inflation Reduction Act, while vital for addressing climate change and promoting the EV sector, could have unintended consequences for firms like Hyundai.
At issue are the tax credits offered to U.S. buyers in of electric vehicles in the law. The full $7,500 incentive is only attributable to cars made in North America with batteries whose raw materials are sourced primarily from the region or from other friendly countries.
Korean executives and diplomats have argued that this would make their Korean-made models more expensive, denting market share even as they build factories here.
To lighten the burden on the likes of Hyundai and SK On, U.S. U.S. Sen. Raphael Warnock, who was on hand for the groundbreaking, has introduced a bill that would delay the phase-in of the domestic-assembly requirement until 2026. This would give Hyundai time to start U.S. production while enabling SK On to diversify away from China in sourcing of the raw materials that go into its Georgia-made EV batteries.
Amid soaring speeches extolling the collaboration that led to what could be a transformative investment in the Bryan County battery and vehicle “Metaplant,” the ambassador introduced a note of caution.
“I believe it is not good for the Korea-U.S. partnership, for the state of Georgia, and not even for the common cause of climate change, by limiting the consumer choices,” the ambassador said.
He added that Korea and the U.S. are “working very, very hard to find a workable solution. The two governments will exert maximum efforts in the next few months,” Mr. Cho added, repeatedly pointing to Korean companies as trustworthy and reliable partners, especially in Georgia.
More than 130 Korean companies call the state home, including household names in Korea like SK, POSCO, LG, Hyundai and Kia, which built the original auto assembly plant in West Point.
“Georgia is a state that embodies the spirit of economic and technological partnership between the (Republic of Korea) and the United States,” Mr. Cho said. The groundbreaking, he added, illustrates that Korean firms keep their promises.
Gov. Brian Kemp noted that Korea, the state’s largest foreign-investment source, has been key to efforts to build out an end-to-end EV supply chain in the state, from materials and components to vehicle assembly and battery recycling.
“Since 2020, we have announced 30 electric-mobility related projects that will ultimately bring over $13 billion in investment and more than 18,910 jobs to our state, including the 8,100 that will come with this single project alone,” Mr. Kemp said.
Following Mr. Cho with remarks, Deputy U.S. Commerce Secretary Don Graves didn’t tackle the incentives problem directly, but instead pointed to the IRA as one within a constellation of legislative wins aimed at driving clean-energy adoption, enhancing climate resilience and boosting American competitiveness.
That includes the bipartisan infrastructure law, which includes $7 billion for a national charging station network and $2.8 billion to improve the domestic battery materials supply chain. It also includes the CHIPS Act, which incentivizes American production of semiconductors to the tune of more than $50 billion.
“The average EV has bouts 2,000 chips, roughly double the number of chips on a non-electric car,” Mr Graves said.
He said the Hyundai plant is part of the Commerce Department’s strategies to sprout domestic clusters in critical industries where America has lost core capabilities.
“Regional clusters containing manufacturing facilities suppliers, basic and translational research and workforce programs, along with supporting infrastructure, will be the foundation for competitive industry. Investments like Hyundai’s are examples of these types of clusters,” Mr. Graves said.
Hyundai Motor Executive Chairman Eui-sun Chung, who reportedly visited Georgia in the aftermath of the IRA’s passage, said he is assured that the company landed in the right spot.
“Our corporate mission is progress for humanity, and looking around, I know we choose the right site here, the right partners and most of all, the right state for progress,” Mr. Chung said.
In an effort to build communities as well as cars, Mr. Chung said, the company unveiled $1.54 million in donations, including $120,000 each to 10 local organizations, as well as $120,000 to Georgia Tech for STEM scholarships.
See more information, including a list of groups receiving donations from Hyundai, Genesis and Kia, in Hyundai’s news release here.
The Pendleton Group is the presenting sponsor of Global Atlanta's Economic Development Channel. Subscribe here for monthly Economic Development newsletters.
The Dean Rusk International Law Center at the University of Georgia is the presenting sponsor of Global Atlanta's Diplomacy Channel. Subscribe here for monthly Diplomacy newsletters.