November 27, 2024

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Hyundai Motor Group CEO Chang Jae-hoon (left) and LG Energy Solution CEO Kwon Young-soo shake hands after a signing ceremony at the battery maker’s headquarters in Yeouido, Seoul, Friday. (Hyundai Motor Group)

Hyundai Motor Group said Friday that it has agreed with LG Energy Solution to jointly build an electric vehicle battery manufacturing plant in the US, expanding their footing in the burgeoning clean car market there.

Under a joint investment of 5.7 trillion won ($4.3 billion), the two companies plan to start construction of the plant later this year.

With an annual production capacity of 30 gigawatt-hours, enough to supply approximately 300,000 fully electric cars, the plant will commence operation as early as late 2025. Hyundai and LG will each hold 50 percent stake in the joint venture.

The production facilities will be in proximity to Hyundai Motor Group Metaplant America, the carmaker’s EV plant in Bryan County, Georgia, which is also slated for construction by 2025.

This is the second joint venture partnership between the two companies, following an agreement to build a battery cell manufacturing plant in Indonesia with an annual output capacity of 10 GWh. It is poised to start production by early next year.

Hyundai Motor Group CEO Chang Jae-hoon and LG Energy Solution CEO Kwon Young-soo participated in the signing ceremony for the business deal held the same day at the battery maker’s headquarters in Yeouido, Seoul.

The battery cells produced in the plant will be put into packs by Hyundai Mobis, a car parts maker affiliated with the auto manufacturer. The battery packs will be supplied to Hyundai Motor Group Metaplant America, Hyundai’s Alabama plant and its smaller affiliate Kia’s Georgia plant.

“Hyundai is going all out to become the global EV market leader. The partnership with LG Energy Solution will lay foundation for us to take an upper hand in the fierce competition,” said Chang, in a statement.

In joining hands with Hyundai, LG Energy Solution meanwhile said it looks to ramp up its global production capacity in the all-important North American market and expand customer base.

From 2009, the battery maker has maintained close ties with the world’s third-largest carmaker by supplying batteries for its key EV lineups such as Avante LPi Hybrid, Kona Electric and Ioniq 6.

Following an earlier announcement with SK On to build an EV battery plant in the US, the carmaker’s business tie-up will LG brings Hyundai’s potential annual production capacity there to 65 GWh, capable of supplying for around 600,000 EVs. Under a 6.5 trillion won investment, Hyundai and SK On last month agreed to set up a battery plant by 2025.

The carmaker is accelerating its EV battery alliance in the US to tackle Washington’s protectionist Inflation Reduction Act, sources said.

For EV purchases to qualify for full tax credits, the law mandates electric cars must be assembled in North America and use battery components made locally. More than 40 percent of battery materials should be mined and refined in the US or countries with free trade agreements with the US as well.

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