Concerns have emerged that the 'MetaPlant America (HMGMA),' a dedicated eco-friendly vehicle factory built by Hyundai Motor Group in the U.S., may not function properly. The tax credit benefit available for purchasing electric vehicles in the U.S. will end in September, leading to expectations of a decline in demand for electric vehicles. Additionally, the so-called Yellow Envelope Law (amendments to Articles 2 and 3 of the Labor Union and Labor Relations Adjustment Act) pushed by the Democratic Party of Korea could potentially disrupt the local production of hybrid vehicles.
According to the automotive industry on the 3rd, Hyundai Motor Group is producing two electric vehicle models, the Ioniq 5, a compact sports utility vehicle (SUV), and the Ioniq 9, a large SUV, at the MetaPlant America, which was completed last October. Kia and Genesis's electrified vehicles are also expected to be manufactured at this plant.
Hyundai Motor Group built the MetaPlant America in Georgia, investing $7.6 billion (approximately 10.5 trillion won), which has the capacity to produce up to 400,000 vehicles annually. This was in response to expectations of an expanding electric vehicle market, as the U.S. was increasing benefits for electric vehicle buyers through the Inflation Reduction Act (IRA) at that time.
However, recently, the growth of the U.S. electric vehicle market has visibly slowed. According to automotive market analysis firm Kelley Blue Book, electric vehicle sales in the U.S. for the second quarter of this year were 310,839 units, a decrease of 6.3% compared to the same period last year. Hyundai's sales in the first half of this year dropped by 2.3% to 28,407 units, while Kia experienced a sharp decline of 53.8% to 13,631 units.
Recently, the U.S. Congress decided to terminate the tax credit benefit of up to $7,500 (approximately 10.4 million won) for electric vehicle buyers by the end of September. Initially, this benefit was set to last until the end of 2032, but the deadline has been moved forward by more than seven years. As a result, there are forecasts that the electric vehicle market may shrink further after the fourth quarter.
In response, Hyundai Motor Group stated its plan to produce hybrid vehicles at the MetaPlant America. Lee Seung-jo, head of Hyundai Motor's financial headquarters, noted during a conference call regarding business performance in April, "We plan to add hybrid vehicles to the production lineup at MetaPlant America from next year."
Unlike pure electric vehicles, the hybrid vehicle market is rapidly growing. In the first half of this year, the combined sales of hybrid vehicles by Hyundai and Kia in the U.S. reached 136,180 units, a 45.3% increase compared to the same period last year.
Some believe that Hyundai Motor Group's plan to produce hybrid vehicles in the U.S. could be halted by labor unions. The Yellow Envelope Law proposed by the Democratic Party of Korea includes provisions stating that 'business decisions affecting working conditions' can also be subject to disputes.
Previously, only wage, benefits, and working hours were considered subjects of disputes, but with the implementation of the Yellow Envelope Law, unions could protest hiring, layoffs, and transfers of production facilities abroad.
Currently, the unions of Hyundai and Kia have not publicly expressed opposition to the hybrid vehicle production plan in the U.S. However, once hybrid vehicle production begins at MetaPlant America and domestic production decreases, there are many forecasts that they may demand adjustments in quantities at the negotiating table.
Most hybrid vehicles sold in the U.S. are manufactured and exported from domestic plants, except for some models like the Santa Fe Hybrid. If hybrid vehicle production is moved to MetaPlant America, it could reduce the workload at domestic factories and subsequently decrease their income.
An official in the automotive industry stated, "To achieve the initially expected effects of the MetaPlant America, the proportion of hybrid vehicle sales must be significantly increased," and added, "The unions will not simply watch the transfer of hybrid vehicle production, which is the largest source of revenue for domestic plants."