Hyundai has been on a roll in the US as the automaker embraces the industry’s transition to electric vehicles. The automaker says EV leases are climbing as buyers take advantage of the tax credit provided by the Inflation Reduction Act (IRA).
After the new IRA guidelines took effect in April, electric models with assembly or battery minerals sourced outside the US or its free trade partners lost eligibility – including Hyundai and Kia models.
After a breakout year led by the best-selling non-American EVs in the IONIQ 5 and EV6, the update threatened Hyundai’s strategy.
Hyundai has been vocal about its opposition to the restrictions after breaking ground on its first dedicated EV plant in the US in October that won’t come online until 2025.
However, a recent update from the IRS allows foreign-assembly models to bypass the law if the vehicles are leased rather than purchased outright. This is because leases are interpreted as commercial business in the law and, as a result, are eligible for the $7,500 tax credit.
Most automakers, including Ford, Hyundai, Kia, Mercedes, and Volkswagen, announced they would pass the lease incentives on to customers to drive down the cost of driving an EV and boost sales.
Hyundai sees growth in EV leases
Speaking with Automotive News, the CEO of Hyundai and Genesis North America (and COO of Hyundai Motor Company), Jose Muñoz, explained how the IRA bill was affecting business.
Muñoz said, “First and foremost, we really embrace the US policy of moving to electrification,” adding:
But obviously, we were counting on certain programs when we did our calculations to invest in our battery EV plant in Savannah and in a U.S. battery plant.
Hyundai North America’s leader says the company is “still committed to electrification” with 17 electric models by 2030 (11 from Hyundai and six from Genesis) while doubling down on its investments.
Muñoz says the company is “happy to see that the IRA is still allowing consumers to benefit from the lease side of the business” regarding the $7,500 tax credit eligibility. He explained the company is more focused on EV leases and:
Since the year started, we’ve increased from 5 percent to about 30 percent lease.
If the US wants to hit its goal of 67% EV share by 2032, Muñoz explains, “the more accessible we can be to everybody, the better.”
Perhaps more importantly, he added that the US needs other OEMs like Hyundai to reach over 11 million EV sales (67% of a 17 million market) by its target.
Hyundai continues building its US EV supply chain after revealing a new EV battery cell manufacturing plant in Savannah, Georgia, on Friday with LG Energy Solution, where the company’s Metaplant America is being built.