ELLABELL, Ga., Oct 25 (Reuters) – Hyundai Motor Co ( 005380.KS ) broke ground on a $5.54 billion electric vehicle (EV) and battery plant in the United States on Tuesday, as South Korea’s biggest automaker struggles uncertain outlook for its EV sales in the top market.
The investment is the largest in state history and the latest in a series of announcements about electric vehicles and batteries in Georgia.
Hyundai plans to begin commercial production in the first half of 2025 at the massive plant in Bryan County about 30 miles west of Savannah, which will have an annual capacity of 300,000 units.
Georgia Gov. Brian Kemp, a Republican, and the state’s two U.S. senators, Jon Ossoff and Raphael Warnock, both Democrats, attended the event and all praised the investment that will eventually add 8,100 jobs. Kemp and Warnock are up for re-election next month.
Kemp said that since 2020, Georgia has announced 30 electric mobility-related projects that will ultimately result in $13 billion in investment and nearly 19,000 jobs. In December, electric car maker Rivian Automotive Inc announced it would invest $5 billion in the state.
The breakthrough comes amid anger from Korea and the EU over US tax policies on electric vehicles.
The Inflation Reduction Act signed by President Joe Biden in August requires electric cars to be assembled in North America to qualify for US tax credits. Hyundai and its affiliate Kia Corp as well as major European automakers were excluded from the EV subsidies as they do not yet make the vehicles there.
Korea’s ambassador to the United States, Taeyong Cho, told reporters that there were ongoing discussions on the tax issue between the Biden administration and the Korean government. He said it was unclear whether the law would have to be changed by the US Congress or whether it could be dealt with through the regulatory process.
The law made roughly 70% of EVs immediately ineligible for tax credits of up to $7,500 per vehicle.
Sales of the Hyundai Ioniq 5 crossover SUV in the US fell about 14% in September from the previous month, hit by the new US law.
Concerns about Hyundai’s US electric car sales under the new regulations were cited by analysts when the company released quarterly results on Monday.
Biden gave the assurance in a letter to South Korean President Yoon Suk-yeol, who had asked the US president last month for help in allaying Seoul’s concerns that the new US rules would hurt South Korea’s automakers.
As a result of the August law, only about 20 electric cars qualify for subsidies under the new rules, among them models from Ford Motor Co ( FN ) and BMW ( BMWG.DE ).
Reporting by David Shepardson in Ellabell, Ga. Editing by Muralikumar Anantharaman and Matthew Lewis
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