SEOUL, Nov. 29 (Korea Bizwire) — Hyundai Motor Group said Tuesday it has signed an initial pact with car battery maker SK On Co. to secure batteries for its dedicated electric vehicle (EV) plant in the United States.
The two South Korean companies have signed a memorandum of understanding for the supply of batteries and future business opportunities in the U.S. EV market, Hyundai Motor Group said in a statement.
Under the “strategic partnership,” SK On plans to begin supplying its batteries for EVs to be built at Hyundai Motor Group Metaplant America (HMGMA) in the state of Georgia in 2025, it said.
They will discuss details such as the volume and time frame of battery supplies later, Hyundai said.
In May, Hyundai Motor Group announced it will invest US$5.54 billion to build the HMGMA to solidify its electrification push in the world’s most important automobile market.
The group said actual construction on the 300,000-unit-a-year EV facility will start in the first half of next year with a goal of commencing production in the first half of 2025.
The facility will produce electric models for Hyundai Motor Co., including its luxury brand Genesis, as well as other models for its smaller affiliate Kia Corp.
The new U.S. plant will be located near existing Hyundai and Kia plants in Alabama and Georgia, respectively.
Hyundai Motor and Kia, which together form the world’s fifth-biggest carmaker, aim to sell a combined 3.23 million EVs, including 840,000 units in the U.S., in 2030 that will account for 12 percent of the global EV market.
Their share stood at 5 percent last year.
Hyundai Motor’s EV sales figures include Genesis models.
The group said it could start producing the all-electric version of the Genesis GV70 SUV at the Alabama plant late this year, but the Hyundai IONIQ 5 and the Kia EV6 will be produced at their domestic plants for export.
Hyundai Motor plans to roll out 17 EV models by 2030, including six Genesis models, with Kia scheduled to release 14 EVs by 2027.
SK On said it expects the latest MOU to strengthen its existing partnership with Hyundai Motor Group. It supplies batteries to Hyundai Motor’s all-electric IONIQ 5 and IONIQ 6 models.
The MOU is expected to help Hyundai and SK On meet the criteria of the Inflation Reduction Act (IRA), which gives up to US$7,500 in tax credits to buyers of EVs assembled only in North America.
The law requires EV batteries to be made with a certain portion of minerals mined or processed in the U.S. or countries or regions that have free trade agreements with Washington.
The required portion of the components will grow to 80 percent in 2027 from 40 percent in 2023.
SK On has recently signed lithium deals with firms in Australia and Chile, both of which have FTAs with the U.S.
It currently operates seven battery plants — one in South Korea, one in the U.S., two in Hungary and three in China. Another U.S. plant is set to begin operation in January.