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    BusinessSouth Korea studies cooperating with the EU for aid for the purchase of cars 'made in the USA'

    South Korea studies cooperating with the EU for aid for the purchase of cars ‘made in the USA’

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    The Ministry of Commerce, Industry and Energy of South Korea will study the possibility of negotiating with the European Union for joint efforts, possibly through the associations of the automobile industry, after the approval of the Inflation Reduction Law of USA.

    On August 12, the US Congress approved key regulations on taxes, climate and health, with an allocation of 433,000 million dollars (433,644 million euros at current exchange rates).

    This initiative contemplates aid of 7,500 dollars (7,511.2 euros) per vehicle for the purchase of new electric models, while incentives for the acquisition of used electric vehicles amount to 4,000 dollars (4,005.95 euros).

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    However, certain restrictions are included, such as the fact that new vehicles cannot exceed the price of 55,000 dollars (55,081 euros) in the case of passenger cars and 80,000 dollars (80,117 euros) in the case of vans and SUVs.

    In addition, to qualify for the new public subsidies, vehicles must be manufactured in North America and from 2023, models with batteries that have Chinese components could not receive the aid.

    For this reason, the South Korean automobile industry is considering a series of options, among them the early start of the construction of manufacturing plants to advance production deadlines.

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    In addition, battery producers intend to expand investments in mining and diversification of raw materials in countries that have free trade agreements with the United States, such as Australia and Chile.

    The Alliance for Automotive Innovation, which represents automobile groups in the United States, criticized that the tax relief requirements for electric vehicles will mean that most vehicles will not be immediately eligible for the incentive.

    There are currently 72 electric vehicle models available for purchase in the United States, including pure electric, plug-in hybrid and fuel cell.

    70% of those electric vehicles would cease to be eligible immediately when the bill is approved and none would be entitled to the full amount of aid when the additional requirements take effect.

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    The manufacturers, in a statement, pointed out that it is “a missed opportunity” at a “crucial” moment and pointed out that it will jeopardize the goal of reaching up to 50% of electric vehicle sales in 2030.

    Despite everything, the Alliance pointed out that it is a large-scale initiative and the Government has “a role to play” in establishing the right conditions for global leadership and success. Manufacturing tax credits and grant funding will help accelerate the conversion of the national industrial base that is taking place.

    Source: Europa Press


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