hankyoreh

Kia’s EV6 model stands in the parking lot of a Kia dealership in San Francisco on Jan. 12

“When we notify them that subsidies for electric vehicles are no longer available, customers leave after saying, ‘No thanks then,’ or, ‘Not interested.’”

This was what Dennis Urrutia, a sales employee at Putnam Kia in San Francisco, told the Hankyoreh on Jan. 12 before adding, “While [the EV6] is continuing to sell, it used to sell a lot more before state incentives were abolished.”

“Due to supply shortages, we’re assigned only three to four vehicles per month at our location,” Urrutia continued. “Before the Inflation Reduction Act, they would sell out within a week, but they don't anymore.”

Parked outside the Putnam Kia store were six EV6 vehicles that had yet to find their owners.

On Aug. 16 last year, the US government passed the Inflation Reduction Act (IRA), which grants tax benefits only to electric vehicles manufactured domestically. As Hyundai Motor Group doesn’t yet manufacture electric cars within the US, US consumers purchasing an EV6 or an IONIQ 5 have not been able to receive tax credits they would have qualified for before Aug. 16 of last year, worth US$7,500. Hence, some predicted that the US sales numbers of Korean cars would be affected; this seems to already be the case locally in the US.

In a sense, Hyundai Motor is suffering the double whammy of reduced subsidies following the IRA on top of the contracting US new car market. During a phone call with the Hankyoreh, an employee of Hankook Motors, a new and used car seller serving San Jose, California, said, “[Reduced] subsidies probably played a part, but due to the economic downturn, people have been reluctant to buy expensive electric cars. A lot of used electric cars are entering the market.” They added, “Overall, people are seeking economical cars rather than expensive cars.”

At Serramonte Kia, which the Hankyoreh visited on Friday, a total of seven EV6 vehicles could be seen, one displayed inside the store and six parked outside. Store manager Bob Bacre said, “Since President [Biden] signed the IRA in August last year, our sales record has dropped significantly.”

“Customers would sign pre-contracts and pick up their cars when they arrived. If we received ten cars a month, all ten would be sold, and if we got 15, all 15 would be sold, but that’s no longer the case now,” he said.

“The manufacturer [Kia] announced its plan of support today, but I don’t think it will be enough,” Bacre went on. “The plan will assist with interest payments for installment purchases, so it’s hard to pinpoint an exact support amount [. . .] For example, with US$2,000 of support, monthly installment payments will only be reduced by US$30.”

Interior of Serramonte Kia, a dealership in San Francisco, on Jan. 13

The plan of support Bacre mentioned was identified to be that put forth by Kia’s local subsidiary. Hyundai Motor Group also acknowledged that its head office has not come up with countermeasures to the IRA.

Kia’s monthly US sales figures for its EV6 model have been falling ever since the IRA. The model sold more than 2,000 units every month from February to June last year, but this number dropped below 2,000 starting in July. In November, the figure was as low as 641. Hyundai Motor Group explained that the decline was due to supply shortages.

A Hyundai Motor Group insider predicted it would be possible to more accurately analyze the impact of the IRA during the first half of 2023.

Photos and article by Ahn Tae-ho, staff reporter

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