2024-01-02 18:00:47
Starting from the new year, the US government has filled all electric vehicles eligible for subsidies under the IRA (Inflation Reduction Act) with American car brands. IRA is a system that provides a subsidy of up to $7,500 (approximately 9.78 million won) to consumers who purchase an electric vehicle produced in the United States and meeting battery parts and material requirements. Starting in 2024, electric vehicles using Chinese battery parts will be excluded from subsidy payments. Although the announcement of additional selected vehicles has yet to be announced, the analysis is that the purpose of the IRA, which was created to protect the domestic industry, has been revealed. Hyundai and Kia’s electric vehicles have been excluded from subsidy payments since April of last year because they do not meet North American assembly or battery parts and material requirements, so there is no change.
The U.S. Department of Energy announced on the 1st (local time) that the number of vehicles eligible for electric vehicle subsidies under IRA will be reduced from 43 types last year to 19 types this year. Tesla (models Y, 3, On the other hand, European and Asian brands were eliminated. Until last year, Volkswagen ID4, Audi Q5, BMX X5, and Nissan Leaf were eligible for subsidies, but were not included this year.
This change is due to the application of detailed regulations related to IRA’s ‘Entertainment of Foreign Concern (FEOC)’ announced by the US government last month. If you use parts made by foreign organizations, you will not be able to receive subsidies. The U.S. government has designated most battery component companies in China as foreign entities of concern, and even when a Chinese company establishes a joint venture with a foreign company outside of China, it is judged to be a foreign entity if the Chinese government’s stake is more than 25%.
Given the high dependence on Chinese products for battery components, there are observations that receiving U.S. IRA subsidies will become more difficult in the future. However, as American companies such as Tesla have reduced the number of Chinese parts and have become eligible for subsidies, they have gained a competitive advantage over electric vehicles in other countries.
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