On the 4th, an analysis indicated that the implementation of the large tax cut law (One Big Beautiful Bill Act·OBBBA) by U.S. President Donald Trump would result in a decrease of $1.9 billion (approximately 2.7 trillion won) in Hyundai's electric vehicle sales in the United States.
According to a report titled "Impact and Implications of the U.S. Trump Large Tax Cut Law on the Automotive and Battery Industries," released by The Federation of Korean Industries (FKI) on the 20th, it is forecasted that the electric vehicle sales of Hyundai Motor Group in the U.S. market could decrease by as much as 45,828 units annually due to the OBBBA. Consequently, the decline in revenue is expected to be $1.95508 billion (approximately 2.72 trillion won). This could potentially represent a reduction of 37% based on last year's sales of 123,861 units by Hyundai Motor Group in the U.S.
The OBBBA is a law that encompasses President Trump's principles of governance, including border wall and security enhancements, as well as cuts in fiscal spending. It contains provisions to abolish the clean energy support measures that were being implemented based on the Inflation Reduction Act (IRA) by former President Joe Biden. The key element is the early termination of the $7,500 tax credit for electric vehicle purchases, which was initially scheduled to last until the end of 2032.
The estimate by FKI that Hyundai Motor Group's electric vehicle sales in the U.S. will decrease is based on an analysis by the National Bureau of Economic Research (NBER), a U.S. think tank. NBER has observed that if the electric vehicle tax credits under the IRA are abolished, the sales of electric vehicle manufacturers based in the U.S. could decline by as much as 37% annually.
FKI analyzed that while expectations for investment increased due to the inclusion of five Hyundai Motor Group electric vehicle models (Hyundai Ioniq 5 and 9, Kia EV6 and 9, Genesis GV70 electric models) in the tax credit target since January, the risks of recovering investments have increased with the implementation of the OBBBA. Additionally, it is anticipated that the profitability of the three Korean battery companies that have been pursuing collaborations with finished car manufacturers will also deteriorate.
FKI stated that to mitigate the impact on the electric vehicle and battery industries due to the OBBBA and to maintain global competitiveness, fiscal support such as policy funds is necessary. It mentioned the need for a revision of the Industrial Bank Act to establish a 50 trillion won "Advanced Strategic Industries Fund" and an agreement on state guarantees for fund bonds. It advocated for extending the period for the stabilization fund for supply chains and securing support measures through contributions from the Export-Import Bank.
Lee Sang-ho, head of the Economic and Industrial Division of FKI, noted, "In an uncertain global policy environment, proactive fiscal support and institutional adjustments from the government are necessary to maintain our corporations' stable production bases and secure international competitiveness," adding, "Comprehensive support combining funds and tax benefits must be expedited to ensure that the electric vehicle and battery industries can establish themselves as future growth engines."