Toyota GM opposes South Korea’s US commercial EV tax credit

South Korea requested a “commercial electric vehicle (EV) tax credit” from the U.S. Treasury Department, and Toyota Motor Corp., GM Tesla, and others expressed their “opposition” opinions.

On the 6th, the Korean government issued a public comment on the US Inflation Reduction Act (IRA) to the US Internal Revenue Service (IRS-2022-0027-0001) (The Government of Korea's Comments on the Implementation of the Inflation Reduction Act of 2022), which is a 'clean commercial vehicle' ' to include rental cars, leased vehicles, and vehicles purchased for use with Uber, and urged Hyundai Motor and Kia Motors to be allowed to receive commercial EV tax credits.

South Korea made an official request on the same day to the U.S. Treasury Department not to impose budget restrictions on commercial vehicle tax credits until 2025, as mandated by the IRA.

Hyundai and Kia demanded that the U.S. Treasury Department allow EV leasers to receive a tax deduction of up to $4,000 on used EVs from vehicle purchases at lease expiration.

"Some automakers oppose using commercial credit for consumer sales," said Reuters CEO Mary Barra at an event on the 1st, telling Reuters that addressing foreign concerns about credit is unlikely. "It's more complicated than one thing that it solves," it reported, stating that it was "important that it adheres to the intent of the bill" that Congress drafted.

“The lack of eligibility criteria for (commercial credits) could undermine the IRA’s goal of expanding domestic production of EV batteries and maintaining US energy independence,” said Stephen Ciccone, vice chairman of Toyota Motor America, in an official letter to the U.S. Internal Revenue Service (IRS) on the 1st. can," he objected.

Hassan Najar, director of public policy for Tesla (TSLA), told the IRS on the 2nd that the IRS' commercial tax credit should be 'applicable only to commercial end users', and that the consumer tax credit 'applies only to individual end users'. It should be," he said against it.

The US IRA distinguishes between non-commercial and commercial use, and subsidizes the installation of batteries made in the United States or produced in the United States for non-commercial electric vehicles.

The Inflation Reduction Act stipulates a reduction in subsidies for electric vehicle batteries using key minerals and parts not produced in the United States, and the existing electric vehicle subsidy is set at $7,500 for the purchase of a new car from 2009.

For commercial vehicles, the capital cost or marginal cost of the additional capital increased in a given period is applied to the tax deduction rate as an additional cost by applying “incremental cost”.

The Korean government's request was stated in an official document that "there should be no budgetary constraints on the tax credits provided to commercial eco-friendly vehicles."

In the first half of this year, South Korea's electric vehicle subsidy (national cost) is 82.25 billion won, and the US electric vehicle is 44.77 billion won, of which 44.19 billion won was paid to Tesla, and GM took the rest.