The South Korean government is reportedly considering filing a complaint with the World Trade Organization (WTO) over the new U.S. Inflation Reduction Act (IRA). The bill states that in order to qualify for the tax credit, electric vehicle manufacturers must complete vehicle assembly in North America and source a significant percentage of major battery components, including lithium, nickel and cobalt, from the United States or countries with which it has a free trade agreement (FTA). etc. metal.

Lee Chang-yang, South Korea's Minister of Trade, Industry and Energy, said: "This behavior is highly likely to violate WTO regulations and the Korea-U.S. Free Trade Agreement (FTA). We are actively reviewing whether to refer the case to the WTO."

"We are communicating our concerns to the U.S. through various channels and will send a senior trade executive to the U.S. next week to confirm U.S. intentions," Li added.

The IRA, which went into effect on Aug. 16, stipulates that the U.S. allows tax credits for electric vehicles that use batteries made in North America, minerals mined in the region, or components manufactured in the region.

To qualify for the subsidy, electric vehicle companies must have a certain proportion of the minerals and battery components required for batteries from North America, including at least 40% of the important minerals required for batteries and 50% of battery components. And this proportion will increase year by year. By 2027, the proportion of important minerals will need to reach 80%; by 2029, the proportion of battery components will reach 100%.

The move will reduce the influence of EV companies outside the United States in the U.S. market. Hyundai Motor Group's main electric vehicles, the IONIQ 5 and EV6, are all produced and assembled in South Korea.

In addition, the bill provides for a tax credit of up to $7,500 per new electric vehicle, meaning electric vehicles that don't qualify for the subsidy have no price advantage over other models.

Korean battery makers such as LG Energy Solutions and SK On are highly dependent on Chinese raw materials, so they are taking the issue seriously.

In response to the bill, Hyundai Motor Group will speed up the construction of its first electric vehicle-specific factory and battery manufacturing facility in the U.S. state of Georgia.