Hyundai Motor to build U.S. battery plants with SK on, LG Energy Solution

A memorandum of understanding for EV batteries in North America between Hyundai Motor Group and SK on in Nov., 2022. [Photo provided by Hyundai Motor Group]

Hyundai Motor Group is expected to set up two plants with LG Solution Ltd. and SK on Co. in Georgia to secure stable supply of electric vehicle batteries as South Korea’s third largest conglomerate is building its first EV plant in the U.S. to take advantage of the country‘s U.S. Inflation Reduction Act.

Hyundai Motor Co., South Korea’s largest automaker, is scheduled to hold a board meeting on Tuesday to vote on the two joint investments for the U.S. battery plants, according to industry sources on Friday. SK on will hold its board meeting on Thursday and LG Energy Solutions is likely to make an announcement on the investment as early as next month, though it hasn’t fixed a date for its board meeting.

Hyundai Motor and SK on are expected to invest about 4 trillion won ($3 billion) in the plant, which will have a capacity of 35 gigawatt hours. The plant the automaker and LG Energy Solution will likely be of similar size, though a final plan has yet to be finalized.

The two battery plants will be located near Hyundai Motor’s EV plant currently being built in Savannah, Georgia. The Hyundai-SK joint plant is expected to start operation in 2025, likely providing the Savannah plant with batteries for 400,000 EVs per year.

“The Hyundai-LG plant is also likely to be about the same size as the Hyundai-SK plant, but there are discussions for a larger production capacity for the longer term,” said an industry insider.

Hyundai Motor Group signed a memorandum of understanding with SK on for EV batteries in North America in November.

Hyundai Motor Group is considering starting operations at its Savannah plant to the second half of 2024 from its original target in first half of 2025. It’s also looking at increasing the factory’s capacity from 300,000 units. The group may set up an EV dedicated production line at Kia Corp.’s car plant in Georgia, similar to what Hyundai Motor did at its Alabama facility where it added a line for its Genesis GV70 EVs earlier this year.

Kia is said to be investing hundreds of billions of won at its Mexico plant to add EV production line to meet the IRA requirement to carry out the final assembly of EVs in the North America region.

The details of the IRA came into effect on April 18, following an announcement at the end of March. Under the new requirements, an EV qualifies for a tax credit of $3,750 if 40 percent of the value of critical minerals used for the vehicle is extracted and/or processed in the U.S. or in a country with which the U.S. has a free trade agreement. Another $3,750 tax credit is given if 50 percent of the components are produced or manufactured in North America.