November 27, 2024

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Finance Minister Choo Kyung-ho (second from right) attends a briefing during his visit to a Hyundai Motor plant in the southeastern coastal city of Ulsan on Tuesday. (The Ministry of Economy and Finance)

Hyundai Motor Group will spend some 2 trillion won ($1.59 billion) to build a plant dedicated to manufacturing electric vehicles in the southeastern coastal city of Ulsan, in a move to strengthen its footing as a "first mover" in the EV sector, it said on Tuesday.

The new plant, located on a 230,000-square-meter site, will be Hyundai Motor’s new car plant set up at home in 29 years. With construction starting in the fourth quarter of this year, the plant is expected to become operational by 2025.

Hyundai Motor Group will “contribute to strengthening Korea's role as an innovation hub for the future global automobile industry through large-scale investments,” it said in a statement.

The new EV plant will be equipped with big data-based intelligent smart systems, automation, and eco-friendly production facilities. The facility is expected to produce up to 150,000 units in the first full year when mass production begins in the second half of 2025.

It is the latest plan announced by the group to beef up domestic EV production. Hyundai's smaller affiliate Kia broke the ground for its new EV production plant with a yearly capacity of 150,000 units in Hwaseong, Gyeonggi Province, in April.

The latest plan was announced as Finance Minister Choo Kyung-ho visited Hyundai Motor's existing Ulsan plant, the world's largest automobile production facility on a single-plant basis, on Tuesday.

Earlier in the day, the minister announced that firms investing in EV facilities would be given tax incentives, just like other “national strategic technologies” such as chips, batteries and vaccines.

Big corporations that make investments into EV production facilities will be entitled to tax credits of up to 25 percent from as early as June. For mid- and small-sized firms, the rate will be set at up to 35 percent.

“Although exports of major industries such as semiconductors are sluggish, exports continued to log record highs, centering on electric vehicles, supporting the vitality of our economy," Choo said. "The government will fully support the expansion of investment in the future mobility sector and the strengthening of competitiveness."

Choo said EV exports continued to log record highs, supporting the vitality of the Korean economy at a time the country’s outbound shipments struggle to rebound due to declining semiconductor demand.

Overall vehicle exports reached a record high of $54.1 billion last year and have continued to increase for 10 consecutive months until last month.

In particular, exports of EVs increased by 40 percent last year compared to the previous year, recording an all-time high of $9.8 billion.

The construction of the new EV plant is part of the auto giant’s plan to invest 21 trillion won in the domestic EV sector and produce 1.44 million EVs. Production on South Korean soil would account for about 45 percent of the company’s total EV production worldwide by 2030.

“The expansion of EV production lines promoted by Hyundai Motor Group is expected to be an essential prerequisite for the creation of an electric vehicle industry ecosystem, and to lead a virtuous cycle to enhance the competitiveness of related industries,” the group said.

Hyundai Motor Group also vowed to strengthen the domestic EV parts supply chain along with the establishment of the EV-dedicated plant, and to aim to be a global hub that leads innovation in the future automobile industry.

“In the midst of a period of transformation in the automobile industry, such as accelerating electrification, we closely cooperate with electric vehicle parts companies to support the advancement of the Korean automobile industry,” the group said.

By Park Han-na (hnpark@heraldcorp.com)