Law.com website has posted, “Korean government and company officials don’t see the exclusion of Chinese rivals [in the United States Inflation Reduction Act] as an opportunity. The two [China and Korea] rely on each other so much. It’s not a new dilemma either. The U.S. is Korea’s closest political ally, but China is its biggest trading partner and deeply involved in Korean supply chains.”
“According to Chul-Wan Park, a professor at Seojeong College who specializes in the auto industry, the Inflation Reduction Act could be a “huge opportunity for South Korea by excluding China, but unfortunately, no company is that well prepared for diversification.” The US might “push Korea to join the Chip 4 Alliance in return for relaxing or delaying the IRA requirements.””
“Korea’s Industry Minister Lee Chang-yang earlier this week said he was considering filing a complaint with the World Trade Organization against the act. Some 25 lawmakers in South Korea proposed a resolution against it, urging the U.S. not to “discriminate” against foreign electric car and battery makers.”
“As one analyst said, there’s a feeling the U.S. is betraying South Korea, particularly given the huge investment that Korean companies have promised to make in U.S. Hyundai announced a plan to invest $5.5 billion to build an EV assembly and battery plant near Savannah, Georgia…”
“The act will result in a loss of 100,000 jobs in South Korea and hurt profits at local auto-parts makers, Kweon Seongdong, a senior ruling party lawmaker said.”
“Another issue is that Hyundai will have to reduce its dependence on Chinese-made auto parts. South Korea imported about 35% of its total auto parts from China in 2021, according to the Korea Institute for Industrial Economics and Trade.”
““It will be hard to secure raw materials and components from the U.S. to meet the threshold to access the tax credits,” BloombergNEF energy storage analyst Evelina Stoikou said. “In addition, companies will have to move fast as it takes time to build component and battery manufacturing capacity (up to three years) and the credits will be phased out in 2032.””
“As Kim Pil-Soo, an automobile professor at Daelim University, put it: “It’s not just a matter for Korean carmakers. U.S. carmakers like Ford and Tesla are also using Chinese minerals to lower the price of EVs. The IRA is a disaster for them too.””