Asia's Legacy Automakers Double Down on U.S. EV Markets: A Geopolitical Play for Supply Chain Dominance

The electric vehicle (EV) race is no longer just about technology—it's a geopolitical chess match where Asian automakers are making bold bets on U.S. manufacturing to navigate trade wars and secure Inflation Reduction Act (IRA) subsidies. Honda, Toyota, and Hyundai are pouring billions into U.S. EV production, signaling that near-shoring and compliance with American policies now outweigh the risks of tariffs. For investors, this strategic pivot creates a clear roadmap for profit: prioritize automakers and their supply chains that are deeply embedded in U.S. manufacturing, as their resilience to trade friction positions them to dominate post-IRA markets.

The Geopolitical Calculus: Tariffs vs. Subsidies

The U.S. automotive market is ground zero for a clash between protectionism and green incentives. While tariffs on imported vehicles and components threaten profit margins, the IRA's $7,500 tax credits for EVs made in North America—and with locally sourced batteries—act as a powerful carrot. Asian automakers are taking the bait.

Take Toyota, which has invested $13 billion since 2020 to expand U.S. EV production. Its North Carolina battery plant (see image below), supplying both Toyota and Honda, is a masterstroke:

By 2027, this facility will produce 30 GWh of batteries annually—enough to power 300,000 fully electric vehicles. This localization not only avoids tariffs but ensures eligibility for IRA subsidies, turning trade barriers into competitive advantages.

While Tesla's stock has dipped amid global overcapacity fears, Toyota's shares have held steady, reflecting investor confidence in its diversified supply chain and U.S. pivot.

Honda's Cross-Border Gambit: Canada as a Tariff-Free Bridge

Honda's $15 billion investment in Ontario, Canada, highlights its strategy to straddle U.S. demand and NAFTA compliance. Its Canadian plants will produce EVs and batteries, with final assembly in the U.S. avoiding tariffs—a textbook example of supply chain resilience.

But the real win is its partnership with LG Energy Solution: their $4.4B Ohio battery plant (part of the “Honda EV Hub”) will begin production by late 2024. This joint venture not only secures battery IP but also guarantees access to IRA subsidies, offsetting the cost of U.S. tariffs.

Honda's 2025 target of 240,000 EVs annually—up from near-zero today—underscores its urgency to scale before competitors.

Hyundai's Bold Bet on Steel and Supply Chain Control

Hyundai's $21 billion U.S. investment, including a Louisiana steel plant, reveals its ambition to control critical EV inputs. By producing “next-gen” steel for EV bodies locally, Hyundai avoids tariffs on imported materials and insulates itself from global supply chain shocks.

CEO José Muñoz's mantra—“increasing localization is the best strategy”—is paying off. The Alabama and Georgia plants, now retooled for EVs, are set to ramp up production ahead of IRA tax credit deadlines.

By 2026, 70% of Hyundai's North American EVs will be made in the U.S., compared to just 20% in 2023. This shift positions it to claim a disproportionate share of IRA subsidies.

Why U.S.-Exposed Asian Automakers Outperform Peers

The IRA's regional content rules and U.S. tariff policies have created a clear divide: automakers with deep U.S. footprints will thrive, while those relying on Asia-centric supply chains will lag.

• Battery Makers with U.S. Presence: Companies like LG Energy Solution (Honda's partner) or Samsung SDI (supplying Ford) are critical. Their U.S. factories qualify for IRA credits, making them indispensable to automakers.
• EV Charging Infrastructure: Honda's stake in the IONNA charging network, with 30,000 planned stations, reduces range anxiety and locks in customer loyalty.

Meanwhile, peers like China's BYD or Japan's Nissan—still over-reliant on Asian production—face higher tariff risks and slower access to U.S. subsidies.

Investment Playbook: Buy U.S. Tethered Supply Chains

Stocks to Watch:
1. Toyota Motor (TM): Its battery plant dominance and hybrid-to-EV transition make it a safe bet.
2. Hyundai (HYMTF): Its steel plant and U.S. expansion are underappreciated growth drivers.
3. Honda (HMC): EV Hub investments and battery partnerships signal aggressive scaling.

Supply Chain Plays:
- Battery Suppliers: LG Energy Solution (LGES) and CATL's U.S. partners.
- Charging Infrastructure: IONNA partners like ChargePoint (CHPT).

Risk-Adjusted Buy Signal: With Q3 earnings approaching, look for these companies to report:
- Rising U.S. production volumes (e.g., Toyota's 2026 EV targets).
- Lower tariff exposure due to localized supply chains.
- IRA subsidy wins, boosting margins.

Conclusion: The U.S. Is the New Supply Chain Battlefield

Asia's automakers are rewriting the rules of the EV game. By doubling down on U.S. manufacturing, they're not just dodging tariffs—they're building moats against geopolitical volatility and securing a first-mover advantage in the IRA's subsidy era. For investors, this is a buy-and-hold opportunity: U.S.-exposed Asian automakers and their partners are the architects of the post-tariff, post-China EV order.

The next earnings season will test these strategies—but the automakers that bet big on U.S. soil are already ahead of the game.