US Electric Vehicle Battery Belt Already Formed... "What Trump Can't Throw Away"

After U.S. President-elect Donald Trump takes office, he intends to revise the support plan for the electric vehicle battery industry under the Inflation Reduction Act (IRA), but it will not be easy as the beneficiary area has already been formed.

The Wall Street Journal (WSJ) reported on the 7th local time that if Trump's pledge becomes a reality, tens of billions of dollars worth of government subsidies that were scheduled to be provided to dozens of battery factories in the U.S. could be at risk, but some predict that subsidies will be maintained to create jobs in the U.S. manufacturing industry.

According to data from the Automotive Research Center (CAR), more than 109,000 jobs in the U.S. are expected to be created through related investments worth $133 billion (about 193 trillion won), with battery factories in the southern and midwestern U.S. accounting for a significant portion.

The term "battery belt" has also been coined to refer to the electric vehicle battery factory area that runs from Georgia through Kentucky and Ohio to Michigan.

Sam Adham of consulting firm CRU Group said subsidies would reduce the cost of manufacturing electric vehicle batteries by an average of $4,000 (about 5.8 million won) per unit, and predicted that tax aid would reach $78 billion (about 113 trillion won) by 2028.

Korean companies have also invested in battery factories in the United States.

SK On is building three plants, including the Kentucky 1st and 2nd plants and the Tennessee plant, through Blue Oval SK, a battery production joint venture of Ford Motor Co. in the United States.

Blue Oval SK will hire 2,500 people to produce its first plant in Kentucky, and local authorities expect the second plant in Kentucky, whose construction has been suspended indefinitely, will eventually be completed, creating a similar amount of employment.

LG Energy Solution operates or builds a total of eight plants in North America alone, including two single plants and six joint ventures with General Motors (GM), Honda, and Hyundai Motor.

Samsung SDI has signed a main contract with GM to invest 3.5 billion U.S. dollars to establish an electric vehicle battery production plant in the U.S.

Wall Street views that the battery industry's support measures are likely to survive as the ruling Republican Party also promotes fostering manufacturing in the U.S.

In addition, repealing a law passed by the U.S. Congress requires congressional consent, as in the legislative process, with some Republicans with districts in beneficiary areas opposed to repealing the law, although Republicans did not approve it when the IRA passed.

Some say government support is needed to win the competition with China.

Amid the recent slowdown in the electric vehicle industry, Ford lost $5 billion (about 7 trillion won) in its electric vehicle business last year.

Against this backdrop, there is a possibility that the same situation as Trump's failure to abolish Obama Care (basic health insurance) during his first term in office will be repeated.