Trump EV Skepticism Jeopardizes $54 Billion in South Korean EV Battery Plans

Trump EV skepticism threatens $54 billion in South Korean investments in US EV battery plants. The future of EV tax credits remains uncertain under his administration.

Trump EV Skepticism Threatens $54 Billion in South Korean EV Battery Plans

South Korean companies are reconsidering their $54 billion investment in US electric vehicle (EV) battery plants amid concerns that President-elect Donald Trump’s EV skepticism could undo key tax credits for EVs. With the fate of government subsidies uncertain, major EV battery makers are holding off on expansion plans in the US.

Companies such as Samsung SDI, LG Energy Solution, and SK On Co. have announced new US plants, but Trump EV skepticism is causing delays. The potential removal of the $7,500 consumer tax credit has made South Korean companies nervous, prompting them to reassess their strategies.

Posco Future M, a key supplier to GM, noted that it has delayed the completion of its plant in Quebec, citing “local conditions” as one of the reasons. This illustrates the ripple effect of Trump EV skepticism.

Impact of Trump EV Skepticism on South Korean Companies

Trump’s stance against the Inflation Reduction Act (IRA) and its subsidies for electric vehicles is threatening billions of dollars in foreign direct investment (FDI) from South Korea. With his skepticism toward EV policies, South Korean firms, major players in the US EV market, are concerned that any changes in EV incentives could hurt their investments and disrupt the EV supply chain shift away from China.

"If there’s any change in the policy, we may have to change our strategy,” said Byeonghoon Kim, CEO of Ecopro Materials Co., which supplies key materials to GM and Ford.

The IRA has been a significant driver for South Korean investments in the US, creating over 20,000 jobs and supporting the growing EV market. However, the uncertainty caused by Trump EV skepticism is forcing companies to pause or reconsider their expansion plans.

Ripple Effects on the US Economy

The implications of Trump EV skepticism extend beyond South Korean companies. The US economy has benefited significantly from these investments, particularly in the so-called "battery belt," spanning states like Michigan, Ohio, and Georgia. Ending tax credits and subsidies could undermine these gains, leading to job losses and reduced competitiveness in the global EV market.

Moreover, the potential policy shift could slow down the transition to cleaner energy and weaken efforts to reduce reliance on China-dominated supply chains. This would not only affect the environment but also the long-term economic stability of regions heavily invested in EV production.

The Potential for Chinese EV Companies to Enter the US Market

One of the critical risks tied to Trump EV skepticism is the possibility of opening the US market to Chinese battery manufacturers. If Trump allows companies like Contemporary Amperex Technology Co. Ltd (CATL) to enter the US market, South Korean companies fear losing their competitive edge. Chinese suppliers often offer lower pricing, which could negatively affect Korean firms.

“China’s entry to the US would be a disaster for Korea,” said Park Chulwan, a professor at Seojeong University.

Optimism Despite Trump’s EV Skepticism

While many are concerned about Trump’s stance on EVs, some are hopeful that the investment plans will continue despite the uncertainty. “I don’t think there’s a high chance they will reduce the benefits in the Inflation Reduction Act,” says Kitae Kim, CEO of SungEel Recycling Park Indiana, a battery recycling facility.

The US remains a vital market for South Korean companies, with key plants located in Republican-governed states. This connection may help preserve incentives for EV manufacturers, despite Trump EV skepticism.

Conclusion

Trump EV skepticism poses a significant challenge to South Korean investments in US EV battery plants. With the fate of key tax credits hanging in the balance, companies are navigating uncertain waters. However, despite the challenges, the US market continues to be crucial for these companies as they work to expand and maintain their foothold in the growing EV market.