Hyundai Motor Group will attempt to speed up its construction of a massive new manufacturing project in Georgia to get a fleet of U.S.-made electric vehicles to market sooner.
But until then, the company and its three brands — Hyundai, Genesis and Kia — will face a “severe impact,” acknowledged Jose Muñoz, Hyundai Motor Co. COO, speaking at the plant’s official groundbreaking last week.
“The issue is how do we handle the next two to three years,” Muñoz said of the company’s new situation.
The group has been on an EV sales tear this year with the Hyundai Ioniq 5, Kia EV6 and Niro EV and Genesis GV60. The three brands together hold the No. 2 slot behind Tesla in terms of EV registrations through August, with a 9 percent share of the EV market, according to Experian.
But since the company announced its intentions to invest in Georgia in May, the passage of the Inflation Reduction Act in September has altered the content and sourcing requirements that determine which models are eligible for a full federal EV tax credit of $7,500.
Hyundai Motor Group’s EVs are no longer eligible for the credits because they are imported, and the loss of the credits could hamper some of their momentum and EV market share.
“The impact is severe,” Muñoz said. “But the solution for us will be, first, to continue to work with the U.S. administration — which for the most part, the reaction is very, let’s say, sympathetic.”
U.S. manufacturing should put Hyundai in a favorable position to receive federal EV tax credits, which is why the automaker is attempting to expedite its construction.
“I think we may, if everything goes well, be able to be producing by the end of the third quarter of 2024, which would be maybe one quarter earlier,” Muñoz said. “But still the batteries will not be available.” He said battery production won’t come online until March 2026.
“Unless there is a change [in the law],” he said, “our vehicles will not qualify until March 2026.”
The Georgia project, a $5.54 billion complex located on 2,800 acres about 30 miles northwest of Savannah, will build up to six new EV models and their batteries for the Hyundai, Genesis and Kia brands.
Muñoz said the factory, to be called Metaplant, will have the capacity to produce up to half a million vehicles a year.
“We are making the current investment to get to 300,000 vehicles in phase one, and then 500,000,” Muñoz said at a media roundtable after the groundbreaking ceremony.
“Construction is expected to start as soon as possible,” he said.
He did not say which models the plant will produce, but a new three-row Hyundai EV crossover called the Ioniq 7 is expected to be the first.
“The intention is that all the cars that we produce will be new cars, but since a lot of things are happening, we are open to all the other options as well,” Muñoz said.
The company is still considering which of the plant’s new models it will export.
Additionally, the project will see the construction of an adjacent battery plant that will be built through a joint venture with a battery supplier. Hyundai has not identified the supplier.
A new supply chain also will be established to support the EV factory, Muñoz said.
“Most of the things are going to be new because we are going to have this battery EV joint venture as well,” Muñoz said. “Some of the suppliers that are already in the state are going to serve the new plant as well, but for the most part, everything will be all new.”
Kia America opened a factory in Georgia in West Point in 2009, where it builds the Telluride, Sorento and Sportage crossovers, as well as the K5 midsize sedan. It has a 360,000-vehicle-a-year capacity.
Muñoz indicated that Hyundai was caught by surprise by the new tax credit rules, although automakers everywhere had similar reactions.
The executive said President Joe Biden reassured the Koreans that the U.S. would support their investment.
“He literally said, ‘We won’t let you down,’ ” Muñoz said. “And then just a few months later we saw this and we were a little bit surprised, to be honest.”
He said the company will focus on delivering good design, technology and quality products as the best way to maintain demand for its EVs.
The three brands plan to bring four new EVs to the U.S. market by the end of next year. That includes the electric version of the popular Genesis GV70 compact crossover, the Electrified GV70, which, separately, will begin production at Hyundai’s plant in Montgomery, Ala.
Jarred Pellat, a spokesperson for Genesis, told Automotive News that the luxury brand is targeting a first-quarter 2023 launch for the U.S.-built Electrified GV70. This could be the first Hyundai Motor Group vehicle to qualify for at least a portion of the credit, but Pellat maintains that it’s too soon to tell how much.
In addition to marking Hyundai’s big new investment, last week’s ceremonies also gave Tae-Yong Cho, South Korea’s ambassador to the U.S., a chance to voice the country’s concern with the new EV content law.
“The newly enacted Inflation Reduction Act is an important legislation for the cause of climate change, and Korea certainly supports its cause,” Cho told the audience, which included American politicians. “However, Korean companies are now at risk for being disadvantaged by the electric vehicle tax credit provision of this act.
“I believe it is not good for the Korea-U.S. partnership or the state of Georgia,” he said, “and not even for the common cause of climate change, by limiting the consumer choices.”