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S. Korea to raise concerns about EV credits, battery sourcing in U.S. visit

SEOUL — South Korean officials will meet U.S. counterparts this week to express "concerns" about the Inflation Reduction Act, which restricts who can receive U.S. 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 U.S. 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 percentage 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 U.S. Trade Representative's office and the U.S. Treasury that the new law may violate trade norms such as the U.S.-South Korea free trade agreement and the WTO agreement, the industry ministry said. Korean automakers will consider adjusting production plans to prioritize the construction of U.S. 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% 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% by 2027. Globally, the treatment of some 58% of lithium, 64% of cobalt and 70% of graphite goes through China, according to ministry data. FALLOUT The new rules are a major complication for battery makers LG Energy Solution (LGES), SK On and Samsung SDI, battery industry sources said. South Korea's LGES supplies Tesla and General Motors, while SK On and Samsung SDI supply Ford Motor and Volkswagen among others. The three battery makers together command more than a quarter of the global EV battery market, according to SNE Research. "It's become a huge headache ... Automaker clients said they didn't expect this new law would take effect this soon," said a South Korean battery industry source.

Kia Telluride could head into luxury territory with flagship trim

Kia will expand the Telluride lineup with a range-topping trim level that will catapult the SUV into luxury-car territory, according to a recent report. The variant will arrive as one of the firm's most expensive models. Without citing sources, website AutoSpies wrote the yet-unnamed flagship Telluride will stand out from less expensive models with a two-tone paint job split below the roof line and additional interior colors, among other posh tweaks. And, somewhat surprisingly, Kia will allegedly offer buyers an off-road package that will bundle skid plates, beefier tires, and a bull bar. The off-roader described by the publication sounds a lot like the concepts Kia brought to SEMA 2018, and it could surf the ruggedization wave sweeping across the industry. There's no word yet on whether the deluxe treatment will continue in the engine bay. As of writing, the Telluride is only offered with a 3.8-liter V6 rated at 291 horsepower and 262 pound-feet of torque. An eight-speed automatic transmission and front-wheel drive come standard, and all-wheel drive is offered at an extra cost. Kia hasn't commented on the rumor, and it hasn't announced plans to expand the Telluride's trim hierarchy. If it's accurate, the flagship version could make its debut in 2020 and arrive in showrooms during the 2021 model year. Its upmarket ambitious would push its base price toward the $50,000 mark, about $20,000 more than the entry-level model and a $10,000 premium compared to the SX currently positioned at the top of the line. While the idea of paying $50,000 for a Kia will certainly startle more than a few buyers, it's not as far-fetched as it sounds. The Stinger is already there, the most expensive GT2 trim is pegged right at that price point, so the South Korean firm has already proved it has the credibility to compete in this space. The Telluride lends itself well to an extra dose of opulence, especially considering demand for luxury SUVs continues to grow in America.

Hyundai, union reach tentative labor deal

According to Reuters, South Korea's labor unions may have reached a tentative deal with Hyundai following a compromise between the two sides on wages. Workers have staged a number of stoppages since August 20, which have cost the South Korean giant 1.02 trillion won - around $1.1B US. It also represents just over 50,000 units of production. That vehicle total sounds like a lot, but it's a small enough figure that Hyundai can apparently catch up with weekend and overtime shifts. We'd wager that this is why US inventories haven't been hit quite so hard aside from the battering already taking place. The proposal will now go before the union's rank and file.
If ratified, the new agreement will see workers getting a 5.14-percent raise in base salaries, along with 8.5-million-won (roughly $7,800) bonuses. Those concessions are a far cry compared to what the union was initially demanding, though. Early proposals included a 56.25-gram gold medal for each employee (worth about $2,400) and a 10-million won bonus (about $9,100) for employees whose children chose not to attend college. The union also sought a bonus worth two months' salary for workers that have been with the company for over 40 years, but this was negotiated down to a flat rate of six-million won ($5,464).
Based on Reuters' report, the work stoppages must have taken a real toll on Hyundai - its domestic sales dropped 20 percent last month, while exports were down nine percent. Those startling figures must have put some fire under the Hyundai bargaining team.