Patrick George writes:

Hyundai has a lot riding on a patch of rural Georgia. In October, the South Korean auto giant opened a new electric-vehicle factory west of Savannah at the eye-watering cost of $7.6 billion. It’s the largest economic-development project in the state’s history (one that prompted the Georgia statehouse to pass a resolution recognizing “Hyundai Day”). For now, workers at the so-called Metaplant are building the company’s popular electric SUV, the Hyundai Ioniq 5, and soon more EVs will be built there, too. And to power those vehicles, Hyundai is set to open a battery plant at the site, and is spending billions to open another one elsewhere in Georgia.

Hyundai’s plan will allow the Ioniq 5—and other future electric cars already in the works—to qualify for tax credits implemented by the Inflation Reduction Act. American-made EVs are eligible for rebates that can knock thousands of dollars off their price, making them far more appealing to consumers. But Hyundai’s nearly $13 billion investment may soon hit a snag. In his second term, President-elect Donald Trump has said he will make those tax credits history. If he follows through on that promise, EV sales will surely slow, and Americans will buy more gas guzzlers that will produce emissions for the decade-plus they’ll be on the road. The problem is worse than it might look: The auto industry is investing more than $300 billion to meet the Biden administration’s EV goals. Most automakers are hemorrhaging money on EVs, and revoking these incentives may give them an excuse to roll back their plans to introduce electric cars, which would give consumers more clean-driving options.

Even if Trump cracks down on EVs, Hyundai might be uniquely well-equipped to keep Americans interested in going electric. The Hyundai Motor Group’s three brands—Hyundai, Kia, and Genesis—have emerged as a distant second to Tesla in EV sales this year. But their electric cars come with price tags, battery ranges, and high-tech features that are hard to beat. Hyundai’s Ioniq 6 sedan retails for about the same as a Tesla Model 3, but can recharge more quickly. The company’s cars also allow Americans to go electric in ways they could not previously: Before the Kia EV9, families looking for a truly spacious three-row SUV had no good electric options. “As the EV scene is about to possibly get shaken up to its core,” Robby DeGraff, an analyst at the consulting firm AutoPacific, told me, Hyundai’s eclectic lineup “is something Tesla lacks.” In spite of Elon Musk’s bromance with Trump, the most important EV company of his second term may turn out to be Hyundai.

It may sound weird that Musk has cheered on Trump’s desire to claw back EV incentives, but Tesla is rare in that it is profitably building EVs at scale. It can weather the loss of tax credits better than others. If the EV tax credits evaporated tomorrow, start-ups such as Rivian and Lucid Motors would face major headaches. They’re still in the early, money-losing stage that Tesla was in for almost two decades: They lack the economies of scale to sell EVs at high volumes and cheap prices. Their EVs are still on the expensive side, so they’ll need all the help they can get to cross the “valley of death.” That’s even a problem for big legacy companies. Ford is already backtracking as electric sales fail to meet expectations and costs keep mounting; it’d be hard to justify more EVs without government help to win over new buyers.

A scant few companies’ electric efforts could be fine without the incentives. Besides Tesla, there’s General Motors. It has spent the year implementing a surprise turnaround of its electric operations after a disastrous 2023, and it’s also making more and more affordable EVs—while approaching profitability as well.

Then there’s Hyundai. Besides Tesla, it is perhaps the only major car company in the United States making money off EVs, and it is bringing out new electric models at a frantic clip. [Continue reading…]