South Korea and the EU are dissatisfied with the US electric vehicle tax credit plan, saying it "violates WTO rules"

On August 12, the European Union and South Korea expressed concerns about the United States' proposed tax credit plan for electric vehicle purchases, saying it "discriminates" against foreign-made cars and violates World Trade Organization (WTO) rules.

The U.S. Senate passed a $430 billion Inflation Reduction Act last week, announcing that it would remove the $7,500 cap on electric vehicle tax breaks, but at the same time imposed restrictions requiring battery components and key minerals to be sourced from North America.

"We consider this to be discriminatory, discriminating against foreign producers relative to US producers and incompatible with WTO rules," a European Commission spokesman said.

She added: "We need to ensure that the measures introduced are fair and non-discriminatory. Therefore, we continue to urge the United States to remove these discriminatory elements from the bill and ensure that it is fully compliant with WTO rules."

South Korea's trade ministry said in a statement that it had asked U.S. trade authorities to relax requirements for battery components and vehicle assembly. Hyundai Motor Co. and battery makers LG Energy Solution, Samsung SDI and SK held a joint meeting, where the South Korean companies asked for support from South Korean authorities so that the bill would not put them at a competitive disadvantage in the U.S. market.

South Korea has sent a letter to the U.S. House of Representatives, asking the United States to include electric vehicles and battery components manufactured or assembled in South Korea in the scope of U.S. tax incentives.

Hyundai Motor Company was quite disappointed, criticizing that the current legislation severely restricts Americans' use and choice of electric vehicles and may greatly hinder the automotive industry's transition to sustainability.

The plan has not only sparked dissatisfaction in the European Union and South Korea, but also sparked discussions in the U.S. Some automakers said last week that most electric models will not be eligible for tax credits due to the requirement that battery components and key minerals must be sourced from North America.