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Tuesday, July 23, 2024

Korean companies to invest $8 billion in U.S. battery factories

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SK Group Chairman Chey Tae-won, left, shakes hands with Hyundai Motor Group Executive Chair Euisun Chung at SK On's Seosan factory in South Chungcheong in July 2020. [SK ON]
SK Group Chairman Chey Tae-won, left, shakes hands with Hyundai Motor Group Executive Chair Euisun Chung at SK On’s Seosan factory in South Chungcheong in July 2020. [SK ON]

SK On and Hyundai Motor and related companies will together invest $5 billion to build an electric vehicle battery plant in Georgia, a major move to counter provisions of the Inflation Reduction Act (IRA).

The same day, Samsung SDI announced a $3 billion investment to build a battery plant with General Motors in the United States in time for President Yoon Suk Yeol’s weeklong state visit to the country.

Under the 50-50 joint venture, Hyundai companies and SK On will invest a total of $5 billion through 2027 for the battery plant in Bartow County, Georgia.

Hyundai Motor, Kia and Hyundai Mobis will initially invest 1.62 trillion won ($1.2 billion). HMG Global, a U.S. subsidiary of three companies, will make the remaining investment later, Hyundai Motor said. Boards of Hyundai Motor, Kia and Hyundai Mobis approved the plan Tuesday.

The plant will have a 35 gigawatt-hour production capacity, which is enough to power 300,000 EVs.

Construction will begin in the second half, with a goal of starting mass production in the second half of 2025.

The plant will be located near Hyundai’s first EV-dedicated factory in Georgia, which is slated to start mass production in 2025. Kia also has a manufacturing plant in Georgia.

The batteries will be made into battery packs by Hyundai Mobis and will be supplied to Hyundai, Kia and Genesis EVs.

The latest joint investment comes about five months after Hyundai Motor and SK On, a wholly owned subsidiary of SK Innovation, signed a memorandum of understanding to cooperate on battery supply.

Hyundai’s electric version of the GV70 SUV recently failed to make the list of beneficiaries for U.S. tax credits under the IRA though they are assembled at its Alabama plant. It uses SK On batteries that are made in China.

It will be SK On’s sixth battery manufacturing plant in the United States. It has two plants in Georgia, two in Kentucky and one in Tennessee.

SK On’s capacity will increase to 129 gigawatt-hour by the end of 2025.

It has supplied batteries for Hyundai’s BlueOn hatchback, Korea’s first EV, which was produced in 2011. Its batteries are being used in Hyundai’s Ioinq 5, Kia’s EV6 and the EV models of Genesis GV60 and GV70.

Samsung SDI CEO Choi Yoon-ho speaks during the company's annual general meeting on March 15 in southern Seoul. [SAMSUNG SDI]
Samsung SDI CEO Choi Yoon-ho speaks during the company’s annual general meeting on March 15 in southern Seoul. [SAMSUNG SDI]

Samsung SDI announced Tuesday it will invest more than $3 billion with General Motors to build a battery plant in the United States.

Though specific details about the breakdowns or location of the factory were not disclosed, SDI said it aims to start operation in 2026.

Production capacity will stand at 30 gigawatt-hours, enough to manufacture 300,000 EVs. Samsung SDI will likely produce high-nickel prismatic- and cylindrical-type batteries at the factory.

“It is a great pleasure to take the very first step to creating a long-term industry-leading partnership with GM in the U.S. EV market,” Samsung SDI CEO Choi Yoon-ho said. “We will do our best to provide the products featuring the highest levels of safety and quality produced with our unrivaled technologies to help GM strengthen its leadership in the EV market.”

The IRA, signed into law by Biden in August, gives up to $7,500 in tax credits to buyers of EVs assembled in North America.

In order to qualify for $3,750 of the credit, 40 percent of the critical-mineral value of the vehicle’s battery has to come from the United States or countries with which the United States has signed free trade agreements.

For the other $3,750, 50 percent of the battery-component value has to come from the United States.

BY SARAH CHEA [chea.sarah@joongang.co.kr]