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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] According to industry sources on September 14, the U.S. electric vehicle (EV) purchase subsidy program under the amended Inflation Reduction Act (IRA) will end on September 30. Until now, the policy provided EV buyers with tax credits of up to $7,500.
The U.S. Internal Revenue Service recently eased the rule by changing the eligibility standard from the “delivery date” to the “contract date,” but starting October 1, no further subsidies will be available. The program, originally slated to run through 2032, is being terminated seven years earlier than planned.
The elimination of subsidies is expected to trigger an inevitable “chasm” in U.S. EV demand. Korean battery manufacturers such as LG Energy Solution, Samsung SDI, and SK On, which have benefited from Advanced Manufacturing Production Credits (AMPC) under the IRA, will likely see their earnings impacted.
The AMPC provides subsidies in proportion to production and sales volumes in the U.S., meaning that a decline in EV demand will directly reduce the financial support available to these companies.
Industry uncertainty has also deepened due to recent labor unrest in addition to the policy change. LG Energy Solution, which operates the HL-GA plant currently affected by the dispute, is also building four additional factories in the U.S. Construction at the HL-GA site is expected to be delayed by at least two to three months. Samsung SDI, meanwhile, is developing joint venture plants with Stellantis and General Motors in Indiana, while SK On is building facilities in Georgia, Kentucky, and Tennessee.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
