Home > Business > Industry

Trade talk delays spell trouble for Hyundai's hybrid sales in U.S.

Published: 14 Sep. 2025, 19:23

Minister of Trade, Industry and Energy Kim Jung-kwan arrives at the Incheon International Airport on Sept. 14 after trade negotiations in the United States. [YONHAP]

Starting Monday, the U.S. tariff on Japanese automobile exports will fall to 15 percent, while tariffs on Korean cars remain at 25 percent, raising concerns that Hyundai Motor Group could face delays in expanding its U.S. hybrid production lines.

According to the Asahi Shimbun on Sunday, a U.S. executive order on the implementation of the U.S.-Japan agreement — which lowers automobile tariffs from 27.5 percent to 15 percent — was published in the U.S. Federal Register on Sept. 9 and will take effect on Tuesday, Sept. 16. The order requires enforcement within seven days of publication.

Korea agreed to a 15 percent tariff during talks in July, but has yet to see the lower rate applied due to differences in follow-up negotiations. U.S. Commerce Secretary Howard Lutnick said in a Sept. 11 interview that Korea must either accept the trade deal or pay the tariff, while President Lee Jae Myung said on Sept. 12 that “we must at least aim for a reasonable agreement,” suggesting the 25 percent tariff will remain in place for now.

The widening gap is particularly concerning in the hybrid vehicle market. Demand for hybrids in the United States has surged after President Donald Trump removed corporate average fuel economy penalties and ended the Inflation Reduction Act’s tax credit of up to $7,500 for electric vehicles at the end of September.

The Toyota Camry Hybrid [TOYOTA]

Japan currently dominates the U.S. hybrid market. According to Samsung Securities, Toyota held a 54.9 percent market share in July, followed by Honda with 19.7 percent, Ford with 10.8 percent, Hyundai with 7.3 percent and Kia with 7.3 percent. Korea had enjoyed a price advantage thanks to duty-free access under the Korea-U.S. FTA.

Even after the 25 percent tariff was imposed, Hyundai and Kia delayed price hikes to protect market share. However, analysts warn that absorbing a 10 percentage point tariff gap against Japanese cars could eventually erode their position.

Hyundai currently relies heavily on imports for its U.S. hybrid sales. While the Santa Fe hybrid is built in Alabama, popular models such as the Tucson, Sonata and Avante — sold as the Elantra in the U.S. — are exported from Korea. According to Kiwoom Securities, Hyundai sold 112,800 hybrids in the U.S. through August, with 66 percent imported from Korea. The Elantra hybrid set a record last month with 4,581 units sold, but the entire volume was subject to tariffs.

In contrast, Toyota produces the Camry hybrid in Kentucky, while Honda builds the CR-V hybrid in the United States, avoiding tariffs altogether.

The Hyundai Motor Group Metaplant America factory [HYUNDAI MOTOR]

Hyundai Motor's Santa Fe Hybrid [HYUNDAI MOTOR]

Hyundai Motor Group plans to convert its Georgia-based Metaplant America into a mixed-production facility capable of building both hybrids and electric vehicles, aiming to increase local output. However, following the recent mass detention incident in Georgia, analysts suggest that rapid expansion could become more challenging.

“Hybrid production requires more parts and processes than electric vehicles, and installing mixed-production facilities at the automated Metaplant could face delays,” said Lee Hang-koo, an adviser at the Korea Automotive Technology Institute.

Japanese carmakers are accelerating local production. According to the Nihon Keizai Shimbun, Toyota plans to consolidate its Lexus plants in Kentucky and Indiana, and expand hybrid production of the Camry and RAV4 at its Kentucky facility. With lower tariffs and expanded U.S. output, Japan’s dominance in the hybrid market may become even more entrenched.

“Hyundai must not only expand its hybrid lineup but also emphasize advantages in durability, distribution networks and pricing to stay competitive,” said Shin Yoon-chul, an analyst at Kiwoom Securities.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE SU-JEONG [[email protected]]