Hyundai Motor has encountered a significant setback as three of its electric vehicle (EV) models, including the popular IONIQ 5, were excluded from U.S. government subsidies. Despite Hyundai’s strategic efforts to boost local production through a newly established EV plant in Georgia, compliance issues with battery-related requirements under the Inflation Reduction Act (IRA) have kept the models ineligible for financial incentives.
Exclusion from Subsidy List
As of January 21, 2025, the U.S. Department of Energy updated its subsidy eligibility list, leaving out Hyundai’s IONIQ 5, IONIQ 9, and Genesis GV70 Electrified models. Initially, all five electric vehicle models from Hyundai Motor Group—including Kia’s EV6 and EV9—qualified for a $7,500 subsidy, but only the Kia models remained on the final list. This decision reduced the total number of EV models, including plug-in hybrids, eligible for U.S. subsidies to 23.
Compliance with the Inflation Reduction Act
The primary reason for Hyundai’s exclusion stems from the stringent requirements outlined in the IRA. According to the policy, only EVs manufactured in North America with locally sourced or assembled battery components are eligible for subsidies. Additionally, batteries containing critical minerals processed or recycled by foreign entities of concern (e.g., China) are disqualified.
For instance, the Genesis GV70 Electrified model was excluded in 2023 for failing to meet these criteria. This underscores the challenges faced by foreign automakers as they navigate America-first policies aimed at prioritizing local manufacturing and reducing reliance on overseas supply chains.
Hyundai’s Strategic Response
Hyundai remains optimistic about meeting the IRA’s requirements by the first half of 2025. The company has already initiated efforts to localize production through its Georgia-based Hyundai Motor Group Metaplant America (HMGMA), which began operations in October 2024. The plant exclusively supplies key EV models like the IONIQ 5 and IONIQ 9 to the U.S. market.
To further address battery compliance issues, Hyundai has partnered with SK On, its primary battery supplier. SK On is localizing production at its Georgia factory and developing a joint battery plant with Hyundai, set to begin operations by the end of 2025 with an annual capacity of 35 GWh.
Policy Uncertainty Under President Trump
Adding complexity to Hyundai’s strategy is the uncertainty surrounding U.S. EV policies under President Trump’s administration. If Trump’s proposed plans to abolish EV subsidies are implemented, automakers like Hyundai, Kia, LG Energy Solution, and SK On—who have heavily invested in U.S. manufacturing—may face substantial challenges.
