November 27, 2024

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Hyundai Motor Group Executive Chair Chung Euisun (center left) and SK Group Chairman Chey Tae-won (center right) are pictured at a business roundtable meeting in Washington, DC, on Tuesday that was hosted by President Yoon Suk Yeol upon his state visit to the US this week. Far left is LG Group Chairman Koo Kwang-mo. (Yonhap)

South Korean battery and automakers are shelling out big funds to set up joint ventures for electric vehicle batteries in the US in response to the protectionist Inflation Reduction Act, industry sources said Wednesday.

Samsung SDI announced Tuesday it is poised to build a joint venture with General Motors in the US. Details of the deal including the location were not made available.

Under $3 billion investment, the plant will have an annual production capacity of 30 gigawatt-hours, supplying batteries for around 200,000 EVs. It is set to start production in 2026.

The manufacturing facility will produce Samsung’s high-nickel prismatic lithium-ion batteries and cylindrical lithium-ion batteries 46 millimeters in width and 80 millimeters in length, which will be installed in GM EVs.

With Samsung’s batteries, GM, who had mostly installed pouch-shaped batteries, will be diversifying its EV battery portfolio, sources said.

GM had maintained close business ties with Samsung’s rival LG Energy Solution through the joint venture called Ultium Cells with three battery manufacturing plants in Ohio, Tennessee and Michigan.

Previously, GM was in talks with LG to build its fourth plant, but chose Samsung instead after the negotiation fell apart.

Following its first joint venture with Stellantis in Indiana, the upcoming plant with GM will be at the forefront of its expanding presence in the US, the world’s third-largest EV market.

“We will make our best efforts to support GM in cementing its EV leadership with high quality and stable battery products,” said Samsung SDI CEO Choi Yoon-ho in a statement.

Hyundai Motor Group also said it plans to inject $5 billion to build a joint venture with Korean battery maker SK On in the US state of Georgia. The two will each hold 50 percent shares on the company.

It is the first time Korean conglomerates are jointly constructing a battery manufacturing plant in the US. Mostly, the battery makers have partnered up with US auto giants.

The plant is set to start production by late 2025 with an annual capacity of 35 GWh, equivalent to supplying batteries to 300,000 EVs.

The battery cells produced in the plant will be supplied to EVs manufactured by Hyundai, Kia and Genesis brands in the US. The production facility will be in proximity to Kia’s Georgia plant, Hyundai’s Alabama plant, and a soon-to-be-built EV manufacturing facility in Georgia.

The third-largest carmaker is reportedly in talks with LG Energy Solution to set up another joint venture in the US as well. The plant is expected to be located near Hyundai’s EV plant, which is under construction.

Hyundai previously sought a business tie-up with SK On alone, but decided to expand its battery supply partnership in a move to expand its presence in the all-important North American market, sources said.

By 2030, its plans to sell 840,000 EVs in the US. Once construction is complete, its Georgia EV plant is expected to produce 300,000 EVs annually.

Hyundai’s revamped EV partnership comes as a countermeasure to the IRA, which recently made all Hyundai and Kia EVs ineligible for EV tax credits in the US.

“These series of business tie-ups of Korean companies in the US came out during President Yoon Suk Yeol’s visit to the US this week. This signals strengthened bilateral relations with the two countries in terms of business cooperation in advanced technology and global supply chains,” said Kim Pil-su, a car engineering professor at Daelim University.

By Byun Hye-jin (hyejin2@heraldcorp.com)