Hyundai to Build $5.5 Billion US Electric Vehicle Plant, as New Tax Law Dims Sales Outlook

The 2023 Genesis GV60, an all-electric SUV that has an EPA-estimated range of up to 248 miles. Courtesy of Hyundai Motor America via AP

South Korean automaker Hyundai Motor publicly broke ground at an opening ceremony for a $5.54 billion electric vehicle (EV) and battery plant in Georgia.

The new plant in Bryan County, which is 30 miles west of Savannah, is the biggest economic development project in Georgia’s history, after a series of new EV and battery project openings in the state.

Georgia’s governor, Brian Kemp, boasted that since 2020, the state has picked up 30 electric vehicle -elated projects that will ultimately result in a total of $13 billion in investments and nearly 19,000 new jobs.

Kemp, a Republican, and the state’s two Democrat senators, Jon Ossoff and Raphael Warnock, all attended the event.

Both Kemp and Warnock, who are up for reelection in November, praised the investment by South Korea’s largest carmaker.

Georgia Rises to Become a Key Player in the EV Market

Hyundai’s Motor Group Metaplant America (HMGMA) manufacturing plant will eventually add 8,100 jobs in the state and will produce up to 300,000 EVs per year by the first half of 2025, according to Business Insider.

The governor worked with state and local officials to bring Hyundai to Georgia with a package of $1.8 billion in tax breaks and incentives.

The three Georgia officials joined other dignitaries at the festivities on Oct. 25 by picking up shovels and ceremonially scooping dirt over the cleared site.

A robotic dog delivered a champagne toast to the VIPs in what was a bipartisan celebration ahead of the midterms.

“This is transformational for the region, not just for people’s children now but for their grandchildren,” said Kemp. “This is going to be a project that will resonate for generations to come.”

This comes five months after Hyundai first announced the site of the new U.S.-based manufacturing plant.

Chung Eui-sun, executive chairman of Hyundai Motor Group, said that the plant will be the envy of the industry, according to the Associated Press.

“Hyundai and the people of Georgia share many qualities: respect for our histories, ingenuity, creativity, and determination to make the world better for the next generation,” said Chung.

“Today, our EVs are recognized as best in class, and with this partnership, we are determined to be the global leader in electrification, safety, quality, and sustainability. With the Hyundai Motor Group Metaplant America, we will continue to evolve beyond an automaker to the world’s leading mobility solutions provider.”

EV carmaker Rivian Automotive Inc. announced last December that it would also invest $5 billion in Georgia for a new plant.

However, that project has been delayed after a judge in Morgan County, Georgia, last week rejected state and county officials’ plan to exempt Rivian from an estimated $700 million in property taxes.

Kemp still believes that Rivian’s Georgia project will still happen, saying that he was “very confident.”

The ‘Inflation Reduction Act’ and Foreign EV Makers

The Korean car manufacturer’s groundbreaking event comes amid uncertainty regarding its American EV sales market.

President Joe Biden’s “Inflation Reduction Act,” which was signed in August, requires all new EVs to be assembled in North America in order to qualify for U.S. tax credits.

Officials from South Korea and the European Union were angered over the new tax policy on electric vehicles.

The act removed tax credits of up to $7,500 per vehicle from 70 percent of all EV models, immediately.

This has caused much concern over Hyundai’s North American EV sales, after the company announced its quarterly results on Oct. 24, according to Reuters.

American sales of Hyundai’s Ioniq 5 SUVs fell about 14 percent in September from the previous month, after the new law was passed.

Hyundai and its affiliate, Kia, along with most European automakers, were excluded from the EV tax subsidies, since they do have any U.S.-located facilities that can produce the vehicles here.

Only about 20 EV models qualify for subsidies under the new law, including designs from Ford Motor and BMW.

Biden sent a letter to South Korean President Yoon Suk-yeol to reassure his government’s concerns over the new rules, which are expected to hurt the nation’s automakers.

Yoon requested that the White House alleviate the situation between the two strategically important allies last month.

Meanwhile, South Korea’s ambassador to the United States, Taeyong Cho, told Reuters that his government was holding ongoing discussions over the tax issue with the Biden administration.

He said he was unaware if the law needed to be amended by Congress or whether it could be changed through regulations.

Warnock, who voted for the act in August, asked the Department of the Treasury to use “maximum flexibility” in adopting regulations to alleviate the pain for Hyundai, according to the Associated Press.

“I will continue to work with Ambassador Cho as well as with other officials to do everything we can to perfect what is already clearly a win,” Warnock said after today’s ceremony.

Reuters and the Associated Press contributed to this report.