The government on Saturday welcomed the new guidelines that the U.S. Treasury Department announced the previous day on tax credits for electric vehicles under the Inflation Reduction Act (IRA), saying it "substantially" reflected South Korea's opinion.
Seoul's industry ministry said the proposed guidelines "substantially relieves the uncertainty of the domestic battery and material industries" and will help "strengthen the battery supply chain cooperation between South Korea and the U.S."
"We will help the domestic businesses to view the IRA as a new opportunity and respond to it proactively," Industry Minister Lee Chang-yang said in a press release, adding the government and President Yoon Suk Yeol have communicated with Washington to produce a favorable result for the country.
The ministry expects there will be no need for Korean battery makers to change their current manufacturing process as a key material used in batteries was excluded from the list of battery components that has certain requirements for a vehicle to get a maximum US$7,500 tax credit in the new IRA guidelines.
According to the ministry, sales of Korean-made eco-friendly vehicles in the United States have been recovering since December despite the IRA, with the increase in sales of commercial vehicles that receive tax benefits.
In February, South Korea exported 13,000 automobiles to the U.S. and increased its proportion of eco-friendly vehicle exports to the U.S. to 7.3 percent, up from 5.1 percent in December.
The Korea Battery Industry Association also positively rated the new guidance, saying it will serve as a chance to strengthen the battery alliance between Seoul and Washington.
The association said domestic material companies are also expected to increase their competitiveness in the global market under the new guidelines.
Source: Yonhap News Agency