Hyundai Motor Company unveils electric car Ioniq 5. Photo = Hyundai
Hyundai Motor Company, who was trying to preoccupy the US electric car market with’Ioniq 5’this year, met an ambush called’buy American’. As President Joe Biden signed a “by American” executive order that requires the federal government to purchase American-made products first when procuring goods, attention from both inside and outside the industry is drawing on its impact on the auto industry.
According to the automobile industry on the 27th, Hyundai Motor Company(245,500 -2.39%)Announced a plan to launch the electric car Ioniq 5 in the US market in the second half of this year in a conference call for the performance announcement the day before. The plan is to launch in Europe in March this year, followed by Korea and the US.
Ionic 5 is the first electric vehicle to apply E-GMP, Hyundai Motor’s electric vehicle platform. Moving away from the internal combustion engine car platform, the mileage and charging speed, which were pointed out as limitations of existing electric vehicles, have improved significantly. Hyundai Motor Company plans to expand its lineup of E-GMP-based electric vehicles such as Genesis JW and Ioniq 6 and 7, starting with Ioniq 5.
US President Joe Biden is giving a speech at the White House in Washington, DC on the 25th (local time) before signing the executive order of’Buy American’, which declared that it would prioritize purchasing US products. The executive order enacted tightening requirements for federal agencies to buy more goods and services from American companies and workers to expand the purchase of American-made goods. Photo = AP
However, even before the launch, there are concerns about difficulties in the US market due to’by American’. This is because President Biden signed a “by American” executive order shortly after taking office, and announced plans to replace only US-made electric vehicles for government vehicles. ‘By American’ stipulates that the federal government prioritizes U.S. products when procuring public goods with taxpayers’ taxes. The federal government is only required to purchase vehicles that are made in the United States or contain at least 50% of American-made parts.
According to the Federal Public Procurement Service, as of 2019, the number of vehicles owned by the federal government reached about 650,000. These vehicles will be replaced by all-electric vehicles in the future. It is by no means small. Tesla, the number one market share in the US, did not exceed 500,000 units last year.
In addition, President Biden is also considering subsidies or sales incentives for purchasing electric vehicles. However, there is a possibility that the subsidy will be limited to electric vehicles made in the US according to the pledge made during the candidate’s days.
Hyundai Motor Company, which does not have an electric car production line in the United States, is bound to deepen its hardship. In addition to China and Europe, Hyundai Motor Company, which has established a strategy to target the US market, which is considered one of the world’s top three electric vehicle markets, is inevitable to partially modify its track. The electric vehicle market in the US is said to have greater growth potential compared to China and Europe, as former US President Donald Trump has taken a reserved position on eco-friendly cars to protect domestic companies.
A view of Hyundai Motor’s Alabama plant. Photo = Yonhap News
However, the specific timing or budget related to the replacement of public vehicles has not been disclosed yet. Some say that it is difficult for US automakers, which lack electric vehicle technology, to meet all the demand for commercial vehicles.
US CNBC said, “There are only three automakers in the United States that produce electric vehicles with US-made parts: Tesla, General Motors (GM), and Nissan. It will take a lot of time and cost to convert all public vehicles into electric vehicles.”
Hyundai Motor Company is also predicting that the aftermath of’by American’ will not be significant. It is observed that the number of official vehicles is about 650,000, and it will take some time to implement the replacement. In addition, when President Biden’s election became influential last year, Hyundai Motor Company has been responding quickly to changes such as turning the US volume to the European market. It is evaluated that a more relaxed strategy can be prepared.
Some analysts say that the Biden administration’s US preferred principle can be strengthened over the Trump administration, and some are concerned about the difficulties of exporting companies including Hyundai Motor Company.
An automobile industry official said, “The federal government has already decided to reduce the exemption clause for buying foreign-made products instead of the United States,” and said, “It is known that a new high-level position has been established in the White House Budget Office.”
Shin Hyun-ah, Hankyung.com reporter [email protected]
Article report and press release [email protected]