*This content was translated by AI.
As the Japanese government recently reorganized its eco-friendly car subsidy system in the name of establishing a supply chain for batteries and important minerals in the country, Hyundai Motor's business strategy, which has been gaining ground since it re-entered the Japanese market, is on alert. In fact, the measure, called the Japanese version of the IRA (Inflation Reduction Act), is expected to act as a fatal handicap for Hyundai Motor, which does not have a local production base, as it prioritizes national security and protection of its own industry, away from performance-oriented support.
The core of the reorganization carried out by Japan's Ministry of Economy, Trade and Industry (METI) is the transformation of the calculation method of "the subsidy for promoting the introduction of clean energy vehicles (CEVs)." Previously, the technical performance of vehicles, such as one-time charging mileage and energy efficiency, was the main criterion, but from 2025, the proportion of "supply chain stability," "contribution to domestic investment," and "maintenance infrastructure" has been greatly expanded among the evaluation systems of a total of 200 points. This is in line with Japan's Economic Security Promotion Act, which designates batteries and rare earths as "specific important materials" and seeks to strengthen domestic production capacity. The Japanese government has assigned high scores to companies operating battery factories in the country, companies with waste battery recycling systems, and companies that can supply power in the event of a disaster through a nationwide maintenance network. As a result, a "slanted playground" has been created that is advantageous for Japanese automakers such as Toyota, Honda, and Nissan.
Hyundai Motor has re-entered the Japanese market with its dedicated electric vehicle brand and online sales model in 2022 and has built a premium eco-friendly car image by injecting the Ioniq 5, the Kona Electric, the Ioniq 6, and the hydrogen electric vehicle Nexo, but this subsidy reform has inevitably damaged each model. The flagship Ioniq 5 and Ioniq 6 are expected to see the biggest deductions in battery supply chain scores. Due to the structure of procuring battery cells from outside such as Korea and China, subsidies are expected to be reduced by about 300,000 to 500,000 yen compared to companies equipped with production facilities in Japan. When a Japanese brand receives subsidies of up to 1.3 million yen, Hyundai Motor will remain at the 800,000 to 1 million yen level, resulting in a more than 3 million won increase in consumer prices. In particular, high-end trims worth more than 8.4 million yen are on the verge of losing price competitiveness due to overlapping "luxury material reduction regulations (0.8 times application).
Kona Electric, which aimed to expand its market share in Japan with entry-class electric vehicles, is likely to struggle in the "maintenance infrastructure and social contribution" category. Hyundai Motor operates a cooperative maintenance network centered on online sales, but it is disadvantageous to score points compared to domestic brands with dense direct service centers throughout Japan. Kona's cost-effectiveness strategy hit a snag of subsidy cuts as the performance of installing rapid chargers and the supply of V2H (Vehicle-to-Home) that supplies vehicle power in the event of a disaster were scored. The hydrogen electric vehicle Nexo, which used to show leadership in hydrogen powerhouse Japan, is losing momentum due to a shift in government policy. Since 2026, the Japanese government has drastically reduced the upper limit of subsidies for hydrogen cars by more than 1 million yen from 2.55 million yen to 1.5 million yen. Hyundai Motor's long-term plan to preempt the hydrogen mobility market through Nexo has become inevitable as subsidies have plummeted at a time when hydrogen infrastructure is being built slowly.
To overcome these environmental restrictions, Hyundai Motor has come up with self-rescue measures to supplement its scores, such as signing a disaster response partnership with local governments in Japan, strengthening the promotion of V2H technology, and expanding its own charging network. However, the industry's main opinion is that it is not easy to break through institutional limits in the absence of a production base or battery joint venture in Japan. After all, Hyundai's business in Japan goes beyond product competitiveness of performance and design, and life and death is at stake in how to offset the "invisible tariffs" created by the Japanese government's closed subsidy policy.
Meanwhile, at Hyundai Mobility Japan, Chung, the eldest son of Hyundai Motor Group Chairman Chung Eui-sun, is working as a regular employee. The fact that he chose the Japanese corporation (HMJ) as the first stage of his management class shows how important Hyundai Motor considers the strategic value of the Japanese market.
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*This content was translated by AI.
