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The Korean firms helping drive the electric-vehicle and battery boom in Georgia and across the U.S. are eyeing a constructive way forward amid federal regulation they see as harmful to the very value chains they’re spending billions to build.
Representatives from Hyundai Motor, SK On and an attorney from steel giant POSCO suggested during a Dec. 7 dinner sponsored by the Consulate General of Korea and organized by the Southeast U.S. Korea Chamber of Commerce that the U.S. government hadn’t fully considered the unintended consequences for foreign-owned firms of the Inflation Reduction Act, its massive climate bill.
Immediately at the bill’s signing into law last August, cars assembled abroad no longer qualified for the $7,500 tax incentive passed on to consumers, making some foreign firms less competitive against their counterparts with plants here already.
Batteries and their raw materials must be also sourced in the U.S. or in free-trade agreement countries, a challenge to do quickly considering China’s strong hold on the market for critical minerals.
Korean executives and officials including the country’s ambassador to the United States have complained that the law should have carveouts for companies building plants in the United States. Hyundai has committed $5.5 billion for its so-called Meta Plant near Savannah, on top of SK On’s $2.6 billion battery plant in Commerce.
“Not everyone was involved in the development of that law, and those people who were involved in that vote, didn’t really take into consideration free trade agreements or trade partners,” said Yong Sohn, chief executive coordinator at Hyundai Motor Co.’s office in Washington.
But Mr. Sohn was also optimistic that a suitable solution could be reached given the increased lobbying by Korean firms and the country’s much stronger investment presence across the U.S. than when Hyundai arrived in the 1980s. On cue, the day after the dinner SK On and Hyundai Motor announced they would spend at least $4 billion on a joint-venture battery plant in Cartersville, Ga.
“There is sympathy within the administration and Congress about the position that they have a put other countries and companies at this stage,” Mr. Sohn said, adding that the bill would beneficial in advancing the industry as a whole, even though it complicates Hyundai’s Georgia expansion plans.
Indeed, Georgia’s U.S. Sen. Raphael Warnock, before a bruising re-election campaign from which he emerged victorious, introduced a bill this fall that would offer a carveout to companies manufacturing in the U.S. It has yet to move, and the up-or-down nature of the vote on the IRA, which benefits Korean-owned solar panel producer Q CELLS in Dalton, pitted senators’ climate goals against the desire to support foreign firms building Georgia’s automotive sector.
Lynn Fischer Fox, a partner at the law firm of Arnold Porter who represents POSCO — which in addition to traditional steel products is making materials for the battery business — echoed the Korean and European positions that the IRA’s domestic-assembly requirements could be a violation of World Trade Organization rules.
“Imagine if somebody in Brazil said that to sell airplanes into the Brazilian market, you had to assemble them in Brazil, Boeing would lose its mind. What if there was a requirement that the feedstock for cattle be sourced from Korea to sell the beef into Korea? (Iowa’s U.S. Sen.) Chuck Grassley would lose his mind. So I think it’s pretty clear to me that it’s that’s a violation.”
“That’s cold comfort though,” she said, because the WTO lacks an appellate body and it could be five years before a resolution of any complaint.
SK On’s Steven Jahng, head of external affairs and social value, focused his comments more on the practical aspects of staffing and running massive battery factories in Georgia, noting that the state faces a shortage of manufacturing labor.
The key to ameliorating persistent workforce challenges, he said, is to change perceptions of manufacturing in the state and drive more people into the trades rather than into four-year colleges.
“We need to educate the parents that manufacturing is not what it used to be. It is clean, it is safe, and it is a career, not a job,” said Mr. Jahng, who asked the 150 assembled guests to support SK On as it grows its name recognition in Georgia. “Hyundai Motors, Kia Motors, Samsung Electronics and LG Electronics are household names in America. SK isn’t. So I need everybody’s help to promote SK that we are a major player in the battery industry.”
The technical aspects of battery function and electric-vehicle history were explored in an academic symposium earlier in the program, which also served as the Southeast U.S. Korea Chamber of Commerce’s annual holiday celebration at the Commerce Club in downtown Atlanta.
Woongchul Choi, a professor in the automotive engineering department at Kookmin University in Seoul, gave a presentation on the history of electric vehicles from the 1800s onward, saying they were adopted first but were doomed by high prices relative to the gas-powered models churned out by Henry Ford’s assembly line.
That same concern remains today, as EVs have yet to reach a scale that reduces cost to the point of affordability for average consumers.
Reducing the cost of the batteries will be imperative, he said, but he wondered aloud how companies would offset China’s influence in the short term. Invited by the consulate, Dr. Choi ended his presentation by suggesting changes to the IRA.
“Whatever we do, the important thing is a reasonable amount of grace period is required,” he said, noting that companies need a transition period to comply with the law. “That’s really the point: We need a little bit of time.”
Georgia Tech Professor Seung-woo Lee showcased his team’s research in a technical presentation. Funded in part by SK, Dr. Lee is working on a technology that would dramatically improve the efficiency of lithium-ion batteries.
The Georgia-based team created a rubber-like solid elastomer in which the electrolytes (used to separate anodes and cathodes and move electrons between them) remain suspended. This advances the moves toward the so-called “dream battery” that would be slimmer, more conductive and less volatile, extending EV ranges and improving safety. SK has also invested in Colorado-based Solid Power, which is working on a similar breakthrough.
Moderated by Global Atlanta, the event included congratulatory remarks from Georgia Department of Economic Development Commissioner Pat Wilson, Consul General of Korea Yoonjoo Park and State Rep. Sam Park, a Democrat from Georgia’s House District 101 in Gwinnett County.