A visitor looks at battery products during InterBattery exhibition held in COEX in southern Seoul on June 9, 2021. (Yonhap)
SEOUL, May 9 (Korea Bizwire) — South Korean battery makers are increasing their presence in foreign markets, particularly in North America, by creating joint ventures (JVs) with automakers to reduce investment costs and comply with the U.S. Inflation Reduction Act (IRA).
In a conference call last week, SK On Co. announced that it is “discussing the possibility of a JV in North America with Ford Motor Co. and Hyundai Motor Co., among other clients.”
Last March, SK On Executive Vice Chairman Chey Jae-won and Volvo Cars CEO Jim Rowan discussed the possibility of collaboration between the two companies.
Samsung SDI Co., which tends to be conservative in making investments, partnered with General Motors Co. to build a battery plant with an annual production capacity of 30 gigawatt hours, aiming for mass production by 2026.
The investment exceeded US$3 billion.
LG Energy Solution Ltd. reportedly plans to establish a JV in North America with Hyundai Motor and will announce the size of the investment this month.
Currently, the company has the largest number of battery plants built and operated in North America among battery makers worldwide.
Partnering automakers will have stable access to batteries and battery-related technology, while battery makers will be able to gain priority for deliveries and save investment costs by sharing the cost of plant construction with the automaker.
It is a win-win situation for both companies.
Moreover, JVs will be eligible for tax deductions of $35 per battery cell ($10 per module) for each 1 kilowatt hour, in accordance with the IRA’s AMPC benefits.
AMPC refers to the Advanced Manufacturing Production Credit, or tax credits that eligible companies can receive under the IRA.
Electric vehicles equipped with batteries produced in a JV battery plant would be eligible for up to $7,500 in subsidies, according to tax regulations.
EVs are designed around the batteries they use, and it is challenging to change batteries during production. This indicates that initial investment and delivery priority are crucial, an industry source said.
Kevin Lee (kevinlee@koreabizwire.com)
