S Korea to raise concerns about EV credits, battery sourcing with US

SEOUL, Aug 29 (Reuters): South Korean officials will meet US counterparts this week to express "concerns" about the Inflation Reduction Act, which restricts who can receive US subsidies for the production of electric vehicles and where firms can source battery materials.
President Joe Biden signed into law this month a $430 billion bill, seen as the biggest climate package in US history.
The law requires that EVs be assembled in North America to qualify for tax credits, ending subsidies for several EV models, and that a per centage of critical minerals used in batteries come from the United States or an American free-trade partner.
Automakers like Hyundai Motor face short-term competitive disadvantage to manufacturers of EVs that receive tax credits in the United States, while industry sources said Korean battery makers must make changes to mineral sourcing routes, which could affect cost adversely.
South Korean officials are expected to tell counterparts from the US Trade Representative's office and the US Treasury that the new law may violate trade norms such as the US-South Korea free trade agreement and the WTO agreement, the industry ministry said.
Korean automakers will consider adjusting production plans to prioritise the construction of US plants for example, the ministry said, while battery makers will seek to diversify where they source minerals from.
Under new rules to kick in next year, at least 40 per cent of the monetary value of the critical minerals in batteries will need to come from the United States or an American free-trade partner, with that proportion rising to 80 per cent by 2027.
Globally, the treatment of some 58 per cent of lithium, 64 per cent of cobalt and 70 per cent of graphite goes through China, according to ministry data.