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South Korea & Automakers Urge U.S. to Tap Commercial EV Tax Credit

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South Korea & Automakers Urge U.S. to Tap Commercial EV Tax Credit

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South Korea & Automakers Urge U.S. to Tap Commercial EV Tax Credit

South Korean government and many automakers are urging the Biden administration to tap a commercial electric vehicle tax credit to boost consumer EV access.

The $430 billion U.S. Inflation Reduction Act (IRA) passed in August ended $7,500 consumer tax credits for electric vehicles assembled outside North America, sparking anger from South Korea, the European Union, Japan and others.

Rivian Automotive RIVN.O, Hyundai Motor 005380.KS and Kia Corp 000270.KS among others want the administration to let consumer vehicle leasing qualify for the commercial EV tax credit that could reduce monthly lease payments.

South Korea also asked Treasury not to impose any budget restrictions on commercial vehicle tax credits through 2025.

Hyundai and Kia want Treasury to allow people leasing EVs to be able to qualify for up to a $4,000 tax credit for used EVs if they buy vehicles when leases expire.

The IRA consumer EV tax credit imposes significant battery minerals and component sourcing restrictions, sets income and price caps for qualifying vehicles and seeks to phaseout Chinese battery minerals or components.

President Joe Biden said last week “there are tweaks that we can make that can fundamentally make it easier for European countries to participate.”

Toyota Motor Corp 7203.T said “the lack of criteria to qualify for (commercial credits) could undermine the IRA’s goals to expand domestic production of EV batteries and maintain America’s energy independence.”

Tesla TSLA.Osaid commercial credits “should apply exclusively for commercial end-users” and the consumer tax credit “should apply exclusively for individual end-users.”

General Motors Chief Executive Mary Barra told Reuters on the sidelines of an event Monday that addressing foreign concerns about the credit is “more complicated than just one thing to solve it” and added “sticking to the intent of the bill” drafted by Congress “is important.

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