Korean carmakers, battery firms forced to reshape US strategy amid EV subsidy cutoff

Hyundai Motor's IONIQ 5 electric SUV / Courtesy of Hyundai Motor

Hyundai Motor Group and local battery firms are being forced to reshape their sales strategy in the United States, as they will no longer receive electric vehicle (EV) subsidies starting this month.

According to updated U.S. federal EV subsidy rules, the $7,500 (10 million won) EV tax credit to automakers expired Sept. 30.

This increases the cost burden, particularly for Korean carmakers Hyundai Motor and Kia, which have both rapidly increased their sales of eco-friendly cars in the U.S. over the past few years.

Following the subsidy cut, Hyundai Motor decided to cut the sticker price of the carmaker’s flagship IONIQ 5 electric SUV by as much as $9,800 for its 2026 model. For 2025 models, the carmaker will also offer a $7,500 cash discount.

Hyundai Motor explained the latest decision is aimed at keeping its market share on a stable growth track in its largest export market.

According to data from the automaker, the number of combined vehicle sales for Hyundai Motor and Genesis reached more than 71,000 vehicles in September in the U.S., up 14 percent from a year earlier. The figure between July and September also came in at some 239,000, up 13 percent from the previous year. This represented the largest U.S. quarterly sales in the carmaker’s history.

Hyundai Motor CEO Jose Munoz speaks during the firm's CEO Investor Day in New York, Sept. 18 (local time). Courtesy of Hyundai Motor

Kia also reported record quarterly auto sales of more than 219,600 vehicles in the U.S. on robust sales of its EV lineups.

Industry officials said local carmakers will have to offer price incentives to U.S. customers even at the cost of falling profitability.

“Once they lose price competitiveness, this will put a brake on their stable growth momentum in the U.S.,” an industry official said. “Both automakers have no choice but to increase local production and maintain the price range despite the unfavorable regulatory environment under the Donald Trump administration.”

The Korean carmakers are also at a disadvantage in the U.S. because of a 25 percent tariff, which is higher than that faced by their major counterparts in Japan and Europe — both of which are paying a reduced tariff of 15 percent.

Local battery makers — such as LG Energy Solution and SK On — are also on alert due to the latest EV subsidy cutoff in the U.S., as the unfavorable regulatory shift will gradually reduce demand for EV batteries.

Market analysts said local battery firms will sell less in the U.S. from the fourth quarter as a result.

“Demand for EVs in the U.S. will slow down in line with the halt of EV tax credit, and this will serve as a major trigger to adjust earnings for LG Energy Solution next year,” NH Investment & Securities analyst Joo Min-woo said.

LG Energy Solution's battery container products for energy storage systems / Courtesy of LG Energy Solution

This is pushing battery firms to find new growth engines to offset a potential earnings fall from their EV battery business.

The energy storage systems (ESS) sector is emerging as one area for revenue growth amid soaring demand for data centers for artificial intelligence services.

LG Energy Solution is also diversifying its portfolio by mass-producing batteries for the ESS sector starting in May in Michigan. Two other major battery firms, SK On and Samsung SDI, are also taking a similar step in the U.S. to ensure profitable growth amid a negative outlook for their conventional EV battery business.