Trump’s EV Doubts Jeopardize $54B Korean Investments
TL/DR –
South Korean companies are reevaluating their $54 billion investment to build electric vehicle (EV) battery plants in the US due to concerns that President-elect Donald Trump might reverse tax credits for EVs. Many of these companies are apprehensive Trump could reduce government incentives for the EV market, endangering thousands of US jobs and years of progress shifting the global EV supply chain away from China. If tax credits are cut, Korean battery companies could be hit hard due to already weak demand for EVs and falling battery prices.
South Korean EV Battery Companies Rethink $54 billion US Investment
South Korean firms are reconsidering their $54 billion investment to build electric vehicle (EV) battery plants in the U.S amidst concerns that the incoming administration may revoke EV tax credits. With President-elect Donald Trump rumored to cut government incentives for the EV market, some companies have paused the construction of plants, fearing reduced demand for EVs.
Trump has criticized President Joe Biden’s attempts to subsidize EVs through the Inflation Reduction Act. Reports suggest the new administration may cut fuel-efficiency requirements and eliminate the $7,500 consumer-tax credit, potentially threatening tens of thousands of US jobs and shifting the global EV supply chain back towards China.
South Korean battery makers, crucial US partners in the effort to reduce dependence on Chinese suppliers, could see their earnings affected. These firms are already grappling with weaker demand for EVs and falling battery prices.
Despite no official actions taken yet, many Korean companies are “anxious” about the potential impact on the EV market, according to Kenny Kim, CEO at SNE Research. “We are paying attention to every single word from Trump” about EVs, echoed Byeonghoon Kim, CEO at Ecopro Materials Co.
Large Investments on Pause
South Korea’s three largest battery makers – Samsung SDI, LG Energy Solution, and SK On Co., have announced plans for 15 battery plants in the US. Half of these were announced after the Inflation Reduction Act was signed in 2022, promising over 20,000 jobs, mainly in the “battery belt” stretching from Michigan through Ohio and Kentucky to Georgia.
However, the future of these investments is uncertain. “If there’s any change in policy, we may have to change our strategy too,” noted Byeonghoon Kim. The Biden administration had offered $7.5 billion to finance a Samsung SDI and Stellantis NV joint venture, but the Trump transition team quickly called this into question.
Korean firms also worry about the potential entry of Chinese battery companies into the US market. The Inflation Reduction Act has previously blocked investments from China, but reports suggest CATL, China’s largest battery firm, might consider establishing a US plant if the policy changes.
Optimism Amid Uncertainty
Despite concerns, some remain optimistic that the EV market won’t lose its benefits. Kitae Kim, CEO at SungEel Recycling Park Indiana, doesn’t anticipate a high chance of reductions in the Inflation Reduction Act. He noted that many battery plants are located in Republican-governed states.
The state of Georgia, home to four SK On plants, has also pledged to support Korean firms. Georgia Department of Economic Development Commissioner Pat Wilson stated that the U.S. remains “the most important consumer market in the world” and believes that “Korean companies knew that prior to the Biden Administration, and that fact will not change with the new administration.”
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