Hyundai Motor Company and LG Ensol join hands to target the North American market with ‘K-Electric Vehicles and Batteries’

2023-05-29 00:09:44

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[TV서울=나재희 기자] As Hyundai Motor Group and LG Energy Solutions decided to establish a North American joint venture for electric vehicle battery cell production on the 26th, the ‘K-Electric Vehicle Battery Alliance’ to target the North American market was solidified.

As a Hyundai Motor Group, it is now possible to actively respond to the US Inflation Reduction Act (IRA) while meeting the rapidly growing demand for electric vehicles in North America. done.

Hyundai Motor Group and LG Energy Solutions will invest 5.7 trillion won to build an electric vehicle battery cell production plant in Brian County, Savannah, Georgia, USA, with an annual production capacity of about 300,000 units, with the goal of operating in 2025.

◇ Hyundai Motor Group, K-Battery Alliance… Sales of 1 million electric vehicles in North America by 2030 ‘stride’

The battery cells produced at the joint plant between Hyundai Motor Group and LG Energy Solutions will go to Hyundai Motor Group’s electric vehicle plant (HMGMA), as well as Hyundai Motor’s Alabama plant and Kia’s Georgia plant.

In other words, it is procuring batteries that can produce about 300,000 electric vehicles annually in the United States.

Previously, Hyundai Motor Group also announced the establishment of a battery cell joint venture in North America with SK On. It is to build a factory with an annual capacity of 35 GWh (gigawatt hour), which is equivalent to 300,000 electric vehicles, and the goal is to start operation in 2025.

As a result, Hyundai Motor Group will be able to secure batteries for 600,000 electric vehicles in the U.S. from 2025.

Hyundai Motor Group has set a goal of selling 1 million electric vehicles in North America, about 30% of the global electric vehicle sales target by 2030. The establishment of a North American joint venture with K-battery companies is a bridgehead for this.

In particular, Hyundai Motor Group has been able to effectively respond to the Inflation Reduction Act (IRA), which has been restricting electric vehicle sales in the US.

By securing electric vehicle batteries for 600,000 units in the United States, it has been able to easily meet the IRA’s North American production and assembly standards. The IRA ultimately stipulates subsidies of up to $7,500 in the form of tax credits only for electric vehicles assembled in North America.

In particular, in the detailed guidelines announced in March, even for electric vehicles that are finally assembled in North America, for this year ▲ 3,750 dollars if more than 50% of battery parts manufactured and assembled in North America are used ▲ Core minerals mined and processed in the United States or FTA countries $3,750 each for use of 40% or more of

As Hyundai Motor Group’s electric vehicles equipped with batteries produced in joint factories with LG Energy Solutions and SK On meet the requirements for electric vehicle tax credits, they are expected to see an increase in sales due to price cuts.

To this end, it is known that Hyundai Motor Group plans to advance the completion of HMGMA from the first half of 2025 to the second half of 2024.

◇ Domestic battery industry accelerates expansion of production bases in North America

In line with the recent IRA implementation, domestic battery makers are expanding their production bases in North America in the form of joint ventures with automakers one after another.

According to the Advanced Manufacturing Production Tax Credit (AMPC) provision of the IRA, the joint venture can receive a tax credit of $35 per 1KWh (kilowatt hour) per cell ($10 per module).

In the case of LG Energy Solutions, the No. 1 battery maker in Korea, it is now possible to expect improved profitability as it has created a North American battery cell joint venture with Hyundai Motor Group to build an electric vehicle battery factory.

Previously, LG Energy Solutions, which established a joint venture with General Motors (GM) and Honda and is operating or constructing a plant in the United States, has already reflected the amount of IRA tax credit of 100.3 billion won in its operating profit in the first quarter of this year.

Through cooperation with Hyundai Motor Group, LG Energy Solutions expects to further strengthen its market competitiveness while diversifying its portfolio in North America, a key strategic market. It also has the advantage of being able to reduce the burden of investment costs as it preoccupies the amount of orders received and shares the cost of plant construction.

In addition to the joint venture with Hyundai Motor Group, SK On created Blue Oval SK, a joint venture with Ford, and is building three battery production plants, including two in Kentucky and one in Tennessee.

Samsung SDI plans to build an electric vehicle battery factory with the goal of mass production in 2026 through a joint venture established with GM, and is also building a factory in Indiana in partnership with Stellantis.

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