President Yoon Suk-yeol, right, shakes hands with Arizona Governor Doug Ducey at the presidential office in Seoul, Friday. Courtesy of presidential office

By Park Jae-hyuk

U.S. state governments as well as Canadian provinces have been sending their top officials to Korea in recent weeks to compete to attract larger investments from Korean electric vehicle (EV) and battery companies that are expanding their presences in North America in order to benefit from the Inflation Reduction Act, according to industry officials, Sunday.

The new act, which will take effect in the U.S. in 2023, offers a $7,500 credit to taxpayers who buy new or used electric or fuel cell vehicles made in North America. A portion of the tax credit ― $3,750 ― will be available when EV makers use batteries made of at least 40 percent critical minerals extracted or processed from the U.S. or countries that signed free trade agreements with the U.S., or recycled in North America. The percentage will increase gradually to 80 percent by 2027.

Korean companies have therefore accelerated their efforts to build manufacturing facilities in North America, causing a fierce competition there to attract them.

Arizona Governor Doug Ducey is the latest example of a high-ranking U.S. state government official who has paid a visit to Korea. Following his visit to Taiwan last week to attract investments for the state's semiconductor industry from TSMC, he then went on his first-ever trip to Korea last weekend and met with Korean President Yoon Suk-yeol to discuss investments from Korean battery makers and tech firms in Arizona.

"With many exciting opportunities ahead, I look forward to further strengthening the economic partnership between Arizona and the Republic of Korea," Ducey wrote on social media.

There is speculation that he may visit LG Energy Solution, which announced a $1.4 billion initial investment in April to build its first-ever North American cylindrical-type battery facility in Arizona, although the company is reconsidering the plan, due to the soaring costs resulting from recent deterioration of the global economy.

Indiana Governor Eric Holcomb also went on an economic development trip to Taiwan and Korea a week earlier, and toured Samsung SDI's factory in Cheonan, South Chungcheong Province, because the company announced in May that it will establish a joint venture with Stellantis to produce EV batteries in Kokomo, Indiana. During his meeting with the Korean president, Holcomb reportedly expressed his gratitude for the contribution made by Korean companies to Indiana's economy and the jobs market.

Late last month, Jason Kenney, the premier of the Canadian province of Alberta, met with Chairman Choi Jeong-woo of POSCO Group to focus more on supplying critical minerals for EV batteries. Kenney wrote on social media that he had in-depth discussions with leaders from POSCO Group and other Korean businesses concerning opportunities to invest in manufacturing, hydrogen, mining, batteries and nuclear tech. Alberta is known for its large deposits of lithium.

Georgia Department of Economic Development Commissioner Pat Wilson also met with Hyundai Motor Group Executive Chair Chung Euisun last month at the conglomerate's headquarters in Seoul. They are said to have discussed the construction of Hyundai Motor's EV factory in the southern U.S. state.