Hyundai Motor, LG Energy Solution set to finalize U.S. EV battery venture

2023.05.24 12:16:02 | 2023.05.24 13:08:00

[Courtesy of Hyundai Motor and LGES]이미지 확대

[Courtesy of Hyundai Motor and LGES]

Hyundai Motor Group and LG Energy Solution Ltd., the world’s second-biggest electric battery maker, are expected to announce their plan to set up a joint battery factory in the U.S. Friday.

This will be Hyundai Motor’s second battery supply source in North America, following its joint factory with SK on Co., another Korean EV battery maker.

According to industry sources on Tuesday, Hyundai Motor Group and LG Energy Solution are scheduled to convene their respective board meetings on Friday to approve the plan.

The two companies are expected to build a factory in Savannah, Georgia, with a target to commence operations by the end of 2025. The facility will have an annual production capacity of 27 gigawatt-hours (GWh), enabling the production of battery cells for about 230,000 electric vehicles. Both parties plan to invest about 6 trillion won ($4.55 billion), with each holding a 50 percent stake.

“The two companies plan to invest 1.4 trillion won each, with a 50-50 ownership structure, and the remaining about 3 trillion won will be secured through borrowing,” said an industry source familiar with the matter.

The battery cells to be produced at the joint factory will be used by Hyundai Mobis to manufacture battery packs, which will then be supplied to vehicles at Metaplant America, Hyundai Motor Group’s first EV factory in the U.S.

“When combined with the battery capacity supplied by LG Energy Solution and SK on, Hyundai Motor Group will have a total capacity of 62 GWh. This is equivalent to the volume needed to power about 580,000 high-performance EVs annually,” said another industry source.

Last month, Hyundai Motor Group and SK on announced plans to invest $5 billion to produce 35 GWh of batteries annually in Bartow County, Georgia.

Hyundai Motor Group aims to sell over 1 million EVs across the U.S., which accounts for 30 percent of its global EV sales target of 3.64 million units by 2030. To achieve this, Hyundai Motor Group plans to shorten the construction period of Metaplant America in Georgia to the second half of 2024 from the originally scheduled first half of 2025.

Additionally, the company is considering increasing the production capacity of its Georgia plant to 300,000 units per year.

Under the Inflation Reduction Act (IRA), the U.S. provides a maximum subsidy of $7,500 (tax credit) to buyers of EVs equipped with batteries produced domestically. Currently, Hyundai Motor cars are excluded from the subsidy benefits as they are not produced locally. However, new models such as the Ioniq 5, Ioniq 6 and EV6 have received positive responses from local consumers.

SK on currently supplies batteries for models such as the Ioniq 5, Ioniq 6, EV6, EV9, GV60 and GV70, while LG Energy Solution supplies pouch-type batteries for the Kona EV and Ioniq 6.

By Song Min-geun and Minu Kim

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