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Image for article titled Hyundai is offering Americans cash to buy its EVs

Photo: Lee Jae-Won (Reuters)

South Korean automaker Hyundai has launched a major cash back incentive, offering up to $7,500 to US buyers of its Ioniq 5, Ioniq 6, and Kona Electric car models through the end of January.

This aggressive move comes in response to Hyundai’s electric vehicles missing out on valuable tax credits under president Joe Biden’s Inflation Reduction Act (IRA) of 2022. The law has spurred investment in domestic EV manufacturing, with $92.3 billion in investments in EV and battery manufacturing being announced since it was enacted. The overarching goal of these investments is to diversify US EV supply chains away from China’s current dominance.

The IRA includes tax credits for electric vehicle purchases, but with a major caveat: cars must be assembled in the US or with key components sourced domestically. Currently, none of Hyundai’s EVs qualify for these credits, as the company does not currently manufacture EVs in the US. However, it is planning to set up a $7.6 billion EV and battery plant plant in Georgia toward the end of this year, targeting to assemble 300,000 EVs annually.

The problem with Hyundai cars

Hyundai, aware of the potential market disadvantage the tax credits put them at compared to US-based EV brands, is stepping up with its own financial incentive to keep its electric cars competitive. This cash offer essentially aims to bridge the gap between the price of a Hyundai EV and one eligible for the IRA tax credit.

But the company has in the past failed to impress insurers, as its cars have been rated as among the easiest to steal. Hyundai and its affiliate Kia had to part with $200 million last May following a class-action suit over the thefts, and the brands had to recall more than 91,000 cars last August over a fire risk—so, needless to say, Hyundai is hoping its latest offer will boost its competitiveness in the US EV space.

However, the horizon for EV tax credits remains uncertain. The current list of qualifying vehicles is small, and the Biden administration’s push for further domestic production requirements could shrink it. This adds an element of complexity to Hyundai’s strategy, as the future effectiveness of their cash bonus offer hinges on the evolving landscape of tax credits.

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