Hyundai blames U.S. Inflation Act for woes
Only EVs made in the United States are eligible for $7,500 tax rebate
K-drama, K-pop, kimchi, bibimbap: Korean culture, in the form of entertainment and food, has long taken hold in California and across the U.S.
It's time to add Korean cars to the list.
Sure, Korean automakers have been selling cars in the U.S. for decades — and successfully, though trying to overcome a reputation for low-price, high-value alternatives to Japanese cars.
Now, Korean cars are turning cool. Hyundai, Genesis and Kia — all made by Hyundai Motor Group — have not only achieved parity with the world's top automakers but also “in some segments they've passed the Japanese,” said Jessica Caldwell, auto analyst at Edmunds.
Especially notable is the high style and early success of the group's new electric cars. “The Ioniq 5 and Ioniq 6 are standouts,” Caldwell said. “They're doing what Tesla did years ago — turning heads.”
Japanese automakers, meanwhile, lag so far in EVs that it's causing anxiety and turnover in their top executive ranks, especially at hybrid-centric Toyota, which recently replaced its chief executive.
Tesla remains far out front in electric car sales, with 59% market share in the U.S., according to Edmunds. But companies such as Hyundai, with fresher models and new body designs, have Elon Musk looking over his shoulder.
When the Hyundai Ioniq 5 and the Kia EV6, compact electric SUVs with base prices around $48,000, debuted a year ago, U.S. sales totaled 37,000 vehicles in the first three quarters of 2022.
The Ioniq 5 and the EV6, built on the same basic platform, together overtook the Ford Mustang Mach-E as second-place contender, according to Edmunds. The Korean brands were poised to take the mantle as Tesla's top challenger, and because of their lower price, perhaps move the needle forward on mass adoption of EVs.
Then the Inflation Reduction Act, the Biden administration's $369-billion climate bill, put on the brakes. Under the act, only electric vehicles assembled in the U.S. would qualify for a $7,500 customer tax reblate, bad news not just for Hyundai and Kia but also for all electric car makers in Japan and Europe. That part of the IRA kicked in immediately when President Biden signed the bill in August.
The result: Hyundai/Kia EV sales slowed dramatically and the Ford Mustang Mach-E retook second place.
Hyundai execs said they felt blindsided, especially after President Biden told a Korean delegation at the White House weeks before the Inflation Reduction Act was passed, “We've got your back,” according to Hyundai North America head Jose Munoz.
“We're not happy about it,” he said in a recent interview at the Hyundai Motor America offices in Fountain Valley. Especially after years spent trying to meet regulatory demands while also trying to design cars that American consumers want to buy.
The company's culture took a remarkable turn in 2020 on the ascendence of Euisun Chung to Hyundai Motor Group chairman. He's the 52-year-old grandson of Hyundai founder Juyung Chung, who turned a single automobile repair garage in 1940s Seoul into a global industrial powerhouse.
In his latest management shake-up, grandson Chung promoted 224 employees, with a fo