“If the US Inflation Control Law comes into effect, South Korea’s electric car exports will be hindered by about 100,000 units per year.” | Joongang Ilbo | JoongAng Ilbo

ⓒ JoongAng Ilbo / JoongAng Ilbo Japanese version2022.08.26 07:35

Some argued that if the US Inflation Control Act (IRA) is enacted, it might hinder exports of more than 100,000 cars a year.

On the 25th, the Federation of Automobile Industries announced in a position statement that, “The entry into force of the US IRA violates the World Trade Organization (WTO) subsidy regulations.” We should give them the same tax incentives as industrial electric vehicles,” he urged. The Federation of Automobile Industries consists of 10 organizations, including the Korea Automobile Industry Association, the Korea Automobile Industry Cooperative Association, and the Auto Parts Industry Promotion Foundation.

The association predicted that the export of 100,000 vehicles would be hindered every year if Korean-made electric vehicles, which have the second largest share of the electric vehicle market in the US, do not benefit from subsidies. About 45,000 Korean eco-cars were sold in the North American market in the first half of this year. Considering that the electric vehicle market in the US is expected to double this year, exports of more than 100,000 units will be disrupted from next year. Not only the finished car industry, but also the parts industry might take a direct hit. The association emphasized that the 13,000 domestic auto parts makers that are promoting the conversion to electric vehicles will also face difficulties.

As of last year, sales of imported electric vehicles (including plug-in hybrids and hydrogen-powered vehicles) in the United States were 32,000 from South Korea, 63,000 from Japan, 50,000 from Germany, and 20,000 from Sweden. A total of 3,000 units were collected. BloombergNEF, a market research firm, forecast that US electric car sales will grow from 650,000 last year to more than 1.2 million this year.

The federation said that the IRA’s national treatment principle of the Korea-US FTA, the role of the Indo-Pacific Economic Framework Treaty (IPEF) that the US is promoting for supply chain cooperation, and the Korea-US policy that US President Joe Biden emphasized during his visit to South Korea. It revealed that it violated the strengthening of the economic security alliance. The federation said, “Our National Assembly and the government should also make efforts to negotiate to revise the bill.” We need to take measures such as providing subsidies,” he added.

Chairman Chung Man-gi of the Federation of Automobile Industries said, “The IRA will not only shrink domestic production of electric vehicles, but also have a negative impact on the competitiveness and employment of future vehicles. It is.” Jeong said, “We will improve the domestic subsidy system, which provides regarding 50% of the subsidy for electric buses to Chinese manufacturers, and improve the target system for the spread of pollution-free vehicles, which has been transformed into an ‘electric vehicle import promotion policy.’ there is a need,” he said.