How U.S. Tariffs Have Reshaped Hyundai and Kia’s EV Plans

A Shift in the U.S. EV Market

The conversation around the so-called “EV slowdown” has intensified in recent months. With the $7,500 federal EV tax credit now eliminated, forecasts for electric-vehicle growth in the United States have become far less predictable. Some analysts warn of an outright collapse in demand; others believe the market is simply settling into a more gradual adoption curve.

Part of this adjustment stems from the reality that many American consumers are not yet prepared to abandon gasoline vehicles entirely by the end of the decade. Meanwhile, several automakers that have struggled to turn a profit on EVs are using this moment—combined with the absence of fuel-economy enforcement—to pivot back toward hybrids and combustion engines.

But another factor is playing an even bigger role in slowing momentum. It begins with a “T”: tariffs.

Tariffs Force Kia to Rethink Upcoming EV Models

At the LA Auto Show, Kia America’s Vice President of Marketing, Russell Wager, made it clear that tariff volatility is now one of the company’s biggest strategic obstacles. For years, U.S. tariffs on imports from South Korea sat at zero percent. Under new trade policies, they surged to 25% earlier this year and now sit at 15%, matching rates applied to Japan and Europe.

This sudden shift has scrambled product planning. Kia’s upcoming EV sedan, the EV4, originally engineered for a tariff-free market, has been indefinitely delayed for the U.S. Wager explained that Kia cannot responsibly commit to pricing or launch timing until it knows whether future trade policy will stabilize.

He added that the end of the federal tax credit has temporarily distorted demand data. Kia’s U.S. EV share fell to only 4% last month, but the company believes the end of the credit may have pulled purchases forward. “We won’t see a true indicator until February or March 2026,” Wager said.

If tariffs return to a predictable structure—whether 15% or 25%—Kia will reassess the EV4’s feasibility. But at the moment, the business case is uncertain.

Electric Pickup Plans Back to the Drawing Board

Kia previously signaled that it would bring an electric pickup—likely tied to the global Kia Tasman—to the U.S. market. That plan now appears unlikely in its original form. In addition to new tariffs, the truck would also fall under the long-standing Chicken Tax, a 25% tariff on imported light trucks. Combined, the total duty could reach 15%–25% plus the additional truck tariff, making the model nearly impossible to price competitively.

The result: Kia’s electric pickup strategy is being fully restructured.

Hyundai and Kia Face Massive Tariff Bills

Hyundai Motor Group, parent company of Hyundai and Kia, has invested heavily in the U.S., including a multibillion-dollar EV and hybrid plant in Georgia. But even domestic production cannot shield it from tariff exposure, because many critical EV components are still sourced internationally.

Recent figures show the scale of the challenge:

• Hyundai: $1.24 billion in tariff costs in Q3

• Kia: $835 million in tariff costs in Q3

• Toyota: Facing a $9 billion tariff bill this financial year

• Ford: Expecting $2 billion in annual tariffs—even while building 80% of its models in the U.S.

These numbers underscore a key point: tariffs disrupt business even for companies with substantial American manufacturing operations, because globalization remains deeply embedded in automotive supply chains.

For brands that are still trying to lower EV costs and build batteries domestically, these burdens make aggressive EV rollout far more financially risky. The deceleration in EV momentum is not caused only by the end of incentives—tariffs are now a dominant factor.

Are Safety Requirements Also Driving Prices Up?

While tariffs are a major contributor to rising vehicle prices, they aren’t the only one. U.S. car prices have been climbing since the pandemic, driven by supply-chain constraints, inflation, new technology, consumer preference for larger vehicles, and safety requirements.

Senate Republicans plan to examine the cost of modern safety features—such as automatic emergency braking and rear-seat child alert systems—arguing that some requirements may be ineffective and unnecessarily expensive. A hearing scheduled for January 14 will include executives from the Detroit Three and a senior Tesla representative.

The U.S. is facing what many consider an affordability crisis.

• The average new-vehicle price has reached roughly $50,000, up from $38,000 pre-pandemic.

• Maintenance, insurance, and financing have all become significantly more expensive.

Some Republican lawmakers argue that long-standing safety improvements such as seat belts and crash structure advancements did far more to reduce fatalities, which still hover around 40,000 deaths per year. Automakers, for their part, say they are being tasked with meeting costly technology mandates at the same time they must transition to electric and hybrid vehicles.

How these competing pressures will be balanced remains an open question—especially as the industry simultaneously advocates for autonomous-vehicle policy, which itself requires advanced safety technology.

Volkswagen Finds Faster, Cheaper Development in China

While U.S. automakers grapple with tariffs and regulatory concerns, Volkswagen is restructuring its EV strategy by embracing development efficiencies in China.

According to Bloomberg, VW’s new €2.5 billion test center in Hefei has enabled:

• Up to 50% lower EV development costs for certain models

• 30% faster development timelines

• Integrated software, hardware, and testing under one roof

This “by-China, for-China” approach ensures Volkswagen can remain competitive with local players like BYD. The strategy raises the question of whether similar development models could eventually be replicated in Europe or North America to reduce costs.

What Features Are Consumers Willing to Sacrifice?

The debate over affordability ultimately circles back to the consumer. If automakers are to reduce costs, something must give. But which features could reasonably be removed? Backup cameras are now ubiquitous and extremely helpful. Automatic emergency braking is widely proven to prevent collisions.

So the question becomes: which features are essential, and which are optional luxuries that inflate prices?
In a market squeezed by tariffs, technology investments, and slowing EV demand, this conversation is becoming increasingly critical.

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