"Why SK On Pins Its Hopes on Hyundai and Kia's Performance in the U.S."

[Korea Financial Times, Gwak Horyung] SK On has seized the opportunity to rebound in the US market. Hyundai Motor Group electric vehicles(EV) equipped with SK On batteries are included in the local tax deduction target.

According to foreign media and industry sources on the 14th, the U.S. Environmental Protection Agency (EPA) released a list of 25 vehicle models eligible for this year’s EV tax credit. This marks a significant drop from last year’s 40 models. Starting this year, the target vehicle types have been significantly reduced due to strengthened regulations on the proportion of core battery minerals procured from overseas concern groups (China, Russia, Iran, and North Korea).

Although the number of eligible vehicles using SK On batteries dropped from 10 last year to 8 this year, SK On is still seen as a beneficiary of the tightened regulations. This is because five new electric vehicles from Hyundai Motor Group equipped with large-capacity batteries will be added, even though Volkswagen ID.4 and others are excluded from the tax deduction target. These include the Hyundai IONIQ 5 and 9, Genesis Electrified GV70, and Kia EV6 and 9.
Previously, at the beginning of last year, none of Hyundai Motor Group’s EVs sold in the U.S. qualified for tax credits. However, with the full-scale operation of Hyundai Motor Group’s Metaplant America (HMGMA) in Georgia, the vehicles are now eligible for benefits.


Hyundai Motor Group is expanding its influence in the U.S. EV market. According to Kelley Blue Book, Hyundai Motor Group sold 89,589 electrified vehicles (BEVs and PHEVs) in the U.S. during the third quarter of last year, marking a 31% increase compared to the same period the previous year. Hyundai’s sales placed it second after Tesla (471,374 units) and ahead of GM (69,458 units). Notably, Hyundai outperformed Volkswagen, which sold 16,375 units of the ID.4.

If Hyundai Motor Group performs well this year, it could provide much-needed relief for SK On, which is grappling with a deteriorating financial structure. Last year, SK On received approximately KRW 211 billion in IRA tax credit benefits, a decrease of about 44% from the same period due to sluggish sales by Volkswagen and Ford.

From SK On's perspective, in order to keep its promise of a successful initial public offering (IPO), it needs to survive this year by taking advantage of the Hyundai Motor Group's U.S. electric vehicle effect. Although the company succeeded in turning a profit in the third quarter of last year, it is expected to record a large deficit again in the fourth quarter as demand for electric vehicles continues to slow. Additionally, risks remain regarding potential changes in EV policies under President Donald Trump’s administration.

Gwak Horyung (horr@fntimes.com)