Kia EV9 Battles Hurdles: Battery Sourcing And Tax Credit Challenges Loom

Kia’s promising electric SUV, the EV9, is facing significant production and sales challenges due to complex battery sourcing regulations and potential shifts in electric vehicle (EV) incentives.

Challenges for EV9 Despite Strong Start

Despite a strong sales start, with nearly 18,000 EV9s sold in the United States (U.S.) through October, the company is slowing production at its new $7.6 billion manufacturing plant in Georgia. The primary obstacle stems from battery cell origins, which currently prevent the vehicle from qualifying for the full $7,500 federal tax credit.

The EV9’s battery cells are produced by SK On in China, which classifies the components under the Inflation Reduction Act’s “Foreign Entity of Concern” (FEOC) provision. As a result, the electric SUV currently qualifies for only a partial $3,750 tax credit.

Kia’s sales performance remains impressive overall. In October, the company reported a 16% increase in total vehicle sales, with EV sales surging 70% year-over-year. The EV9 has been a key driver of this growth, outpacing even Kia’s first dedicated EV model, the EV6.

Domestic Battery Plants in Progress

To address the battery sourcing issue, Hyundai is rapidly developing battery production plants in Georgia. The company is constructing two battery plants – one with SK On with a 35 GWh annual capacity, and another with LG Energy Solution expected to have a 30 GWh capacity.

The situation is further complicated by potential political changes. Reports suggest that a potential Trump administration might eliminate EV tax credits altogether, which could significantly impact foreign automakers with U.S. manufacturing plants.

To mitigate these challenges, Kia is offering substantial incentives. Current promotions include $7,500 in customer cash, a $1,500 bonus for Tesla owners, and additional retail cash bonuses. The EV9 has already seen average discounts exceeding $18,000 this summer.

Limited U.S. Production and High Prices

Most EV9 models currently sold in the U.S. are imported from South Korea, with limited production at the new Georgia plant. In Q3, Hyundai reportedly produced only 21 EV9 units at the new facility, with just one sold in the U.S. market according to The Korea Herald.

Pricing remains another hurdle, with EV9 models starting at $55,000 and premium trims reaching up to $80,000 – exceeding the IRA’s price threshold for SUV tax credits.

Read More: Kia Solidifies EV Ambitions: 1.6 Million EV Sales By 2030

As Kia navigates these complex challenges, the company remains committed to expanding its EV lineup. The EV9’s success could be crucial in maintaining the brand’s momentum in the rapidly evolving EV market.

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