Korean automakers and local battery manufacturers are adjusting their operations in the United States following the expiration of federal electric vehicle (EV) subsidies.

Under the updated U.S. federal EV subsidy rules, the US$ 7,500 EV tax credit for automakers expired on 30 September 2025.

The removal of this incentive increases the cost burden for Korean carmakers Hyundai Motor and Kia, which have expanded their sales of eco-friendly vehicles in the U.S. over recent years.

In response, Hyundai Motor reduced the sticker price of its Ioniq 5 electric SUV for the 2026 model. For 2025 models, the company is offering a cash discount. The automaker stated that this measure is intended to maintain stable growth in its largest export market.

Industry officials noted that local automakers will need to provide price incentives to maintain competitiveness, even if this reduces profitability.

An industry official stated, "Once price competitiveness is lost, it will slow growth momentum in the U.S. Both automakers will need to increase local production and maintain competitive pricing despite regulatory challenges under the current U.S. administration."

Korean automakers are further affected by a 25% tariff in the U.S., higher than the 15% applied to competitors from Japan and Europe.

Local battery manufacturers, including LG Energy Solution and SK On, are also impacted by the subsidy cut, as the regulatory change is expected to reduce demand for EV batteries. Analysts anticipate lower sales for these firms in the U.S. from the fourth quarter onwards.

An industry analyst stated, "Demand for EVs in the U.S. will slow following the termination of the EV tax credit, which will necessitate adjustments to earnings for LG Energy Solution in the next fiscal year."

To mitigate potential earnings declines from the EV battery business, battery manufacturers are exploring alternative revenue streams. The energy storage systems (ESS) sector has been identified as a growth area due to rising demand from data centres supporting artificial intelligence services.

LG Energy Solution began mass production of batteries for the ESS sector in Michigan in May 2025. SK On and Samsung SDI are also expanding production in the U.S. to maintain operations amid a challenging outlook for conventional EV battery sales.