Korean firms brace as Trump threatens EV tax cuts

U.S. President-elect Donald Trump listens during an America First Policy Institute gala at his Mar-a-Lago estate in Palm Beach, Fla.

, Nov. 14. AP-Yonhap Automakers, battery firms rush to deepen communication with US By Lee Min-hyung Korean carmakers and battery firms see no clear breakthrough in sight as U.



S. President-elect Donald Trump repeatedly threatens to drastically cut tax incentives for electric vehicles (EVs), industry officials said Friday. They said they have no choice but to wait and see, while stepping up vigilance against any policy changes in the upcoming Trump era.

Trump has openly vowed to repeal the U.S. Inflation Reduction Act (IRA) after taking office.

The IRA is considered the flagship policy of the current Biden administration. Under the IRA, the U.S.

government offers increased tax credits for EVs with batteries, provided that their materials are extracted or processed within the United States. Hyundai Motor Group and Korea’s top three battery firms — LG Energy Solution, Samsung SDI, and SK On — have made enormous investments in recent years by building manufacturing facilities in the U.S.

to comply with the IRA and secure more incentives. However, there are growing concerns that they may suffer steep earnings falls in the U.S.

, as Trump is widely expected to reduce tax breaks. Industry officials said they are strengthening communication channels in the U.S.

to explore measures that could minimize potential repercussions once Trump takes office in January 2025. “We have to keep a closer watch on how the IRA will be revised under Trump’s second term, but for now, there is little we can do, as the details of any policy changes have yet to be finalized,” an official from a carmaker said. Many critics argue that Trump will not be able to push for the abolition of the IRA, as it would need to pass through Congress.

However, Korean manufacturers are likely to receive much fewer tax incentives than they did under the Biden presidency. “Most Korean battery firms and EV makers will need to intensify negotiations with the U.S.

government and make a stronger case to the authorities that they are increasing investments and creating more jobs for the world’s largest economy,” the official said. Seen above is a battery factory, established jointly by LG Energy Solution and General Motors, in Spring Hill, Tenn. Courtesy of LG Energy Solution Hyundai Motor Group has also taken proactive steps to address the uncertainty by appointing two U.

S. experts as new top executives during its recent year-end management reshuffle. Another official in the auto industry said EV makers and battery companies will likely be able to mitigate the risk from a longer-term perspective, as EVs are expected to become mainstream around 2030.

“Electrification is an inevitable step for the global auto industry, so such U.S. subsidy risks will be alleviated in the long run," the official said.

"Therefore, EV and battery makers will focus on minimizing any short-term damages during the Trump era. The role of the Korean government is also crucial, as there is a clear communication barrier with the U.S.

at the corporate level.” Regarding the concerns about the possible repeal of the IRA, Korea’s Ministry of Trade, Industry and Energy said, “Nothing has been confirmed.” The ministry said it is reviewing diverse scenarios during the Trump era, and shared its plan to step up negotiations with the U.

S. “The Korean government has held multiple conferences with each industry and tightened communication to brace for the external uncertainty,” the ministry said. “We will also keep holding more talks with our U.

S. counterpart.”.