S. Korean foreign minister expresses concerns over US EV tax incentives

South Korean Foreign Minister Park Jin conveyed his concerns over a new US law excluding electric vehicles built outside North America from tax breaks during a phone conversation with US Secretary of State Antony Blinken

The Inflation Reduction Act, a bill signed into law by US President Joe Biden last Tuesday, calls for expanding tax breaks for electric vehicle (EV) buyers, but only for EVs built in North America.

The bill also includes provisions to prevent EVs from receiving benefits if they are equipped with batteries or battery components made in China.

Hyundai Motor Co. and Kia Corp., both South Korean automakers, have expressed concern about the act, as they manufacture their flagship EVs, such as the IONIQ 5 and EV6, in South Korean plants and ship them overseas.

The IONIQ 5 and EV6 have been gaining traction in the US market in recent years.

According to the source, Park told Blinken that South Korean automakers are worried about the new law and asked for flexible implementation by the US.

Following the conversation, the foreign ministry and the state department each issued a press release, but neither disclosed any discussion of the act.

But on the same day, Park told the National Assembly's committee on foreign affairs that he was aware of South Korean companies' concerns about the new U.S. act and that he had let the US know "through various channels."

Park also noted that the Inflation Reduction Act may violate the South Korea-U.S. Free Trade Agreement and the most-favored-nation treatment principle under the World Trade Organization agreements.