Kia to qualify for US tax incentives by moving electric vehicle manufacturing capacity

The new US tax credit program that came into effect with the Inflation Reduction Act this April dealt a serious blow to thriving Korean and Chinese electric vehicle makers. After the bill went into effect, vehicles would have to meet minimum requirements for the sourcing and manufacturing of critical battery minerals, and the final assembly has to happen in North America. Kia did manage to find a loophole via leasing laws that allowed buyers to take advantage of tax incentives, but, at the time of writing, no Kia qualifies for tax incentives if bought outright.

Kia is hoping to change that, if a report by The Korea Herald is accurate. Kia is currently deciding whether it should move production capacity over to its existing factory in Nuevo Leon, a state near the US-Mexico border. This announcement comes hot on the heels of an announcement that Kia is planning to have a fully operational EV manufacturing facility in the US state of Georgia by the end of 2024. Moving EV production to the Mexico factory would allow Kia to take advantage of US subsidies to make its vehicles more affordable, perhaps clawing back market share in the process.

Tesla also recently made a significant investment in the Mexican border state to manufacture the upcoming Model 2 there. With the ongoing electric vehicle price war and the steady uptick in EV adoption, it's clear that makers like Kia, Toyota, and Hyundai will have to respond to the US government's rules to stay relevant to US consumers.

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