The electric vehicle subsidies provided by the U.S. government will be eliminated starting from the 30th of this month. This is due to a bill signed by U.S. President Donald Trump in July that prematurely eliminated the tax credits for purchasing electric vehicles. With the disappearance of the electric vehicle subsidies, which provided tax credits of up to $7,500, not only Hyundai and Kia, which sell electric vehicles in the U.S., but also Korean battery companies are expected to face inevitable impacts.
According to an analysis of data from the U.S. Internal Revenue Service on the 1st, there are currently 29 models eligible for the $7,500 tax credit for electric vehicles (including plug-in hybrids) purchased in the U.S. by the 30th, as of August 29. This includes two models from Hyundai (Ioniq 5, Ioniq 9) and two models from Kia (EV6, EV9), in addition to ten models from Tesla.
Among Korea's three major battery corporations, LG Energy Solution and SK On are expected to be impacted by the elimination of the electric vehicle subsidies. The Cadillac Lyriq, Optiq, and Vistiq, along with the Chevrolet Blazer EV, Equinox EV, and Silverado EV, and the GMC Sierra EV, which are electric vehicles receiving the $7,500 tax credit, are supplied batteries by Ultium Cells, a joint venture between General Motors (GM) and LG Energy Solution.
The only plug-in hybrid model among the vehicles receiving tax credits is the Chrysler Pacifica PHEV, which entered into a battery supply contract with LG Chem in 2016, before LG Energy Solution went public.
LG Energy Solution is reportedly supplying batteries for Tesla's dual-motor Cybertruck, long-range Cybertruck, and single-motor Cybertruck in conjunction with Japan's Panasonic. The long-range all-wheel-drive Model 3, long-range rear-wheel-drive Model 3, and Model 3 Performance from Tesla are equipped with batteries from Panasonic, China's CATL, as well as LG Energy Solution.
In addition, LG Energy Solution, Panasonic, and CATL supply batteries for Tesla's Model Y long-range all-wheel-drive model and Model Y long-range rear-wheel-drive model.
The Hyundai Ioniq 5 and Ioniq 9, for which SK On supplies batteries, are currently eligible for the $7,500 subsidies, but the subsidies will be discontinued starting from the 30th. The same applies to the Kia EV6 and EV9. The Ford F-150 Lightning is also supplied with batteries by SK On.
The Korea Institute for Industrial Economics & Trade (KIET) stated in its report titled "Diagnosis and Overcoming Strategies for the Crisis of the Korean Battery Industry" that "with the elimination of tax credits that served as electric vehicle subsidies, the purchasing prices of electric vehicles will rise, leading to a downturn in demand for electric vehicles as well as batteries. It added that opportunities should be sought in areas such as energy storage systems (ESS), drones, and humanoid robots."
President Trump signed the large-scale tax cut bill known as the "One Big Beautiful Bill Act (OBBBA)" in July. OBBBA includes provisions to prematurely eliminate or reduce clean energy and electric vehicle subsidies implemented during the previous Biden administration.
As a result, the subsidies that were previously guaranteed for new electric vehicle purchases have been advanced by about seven years from the originally promised 2032, and the $4,000 tax credit provided for used electric vehicle purchases will also be eliminated as of the 30th of this month.