Hyundai and LG partner to build a $4.3 billion-EV battery plant in US
The facility will have a production capacity of 30 GWh, capable of supporting the production of 300,000 EVs.
In a significant move that underscores the rapid growth of the electric vehicle (EV) industry, Korean firms Hyundai Motor Group and LG Energy Solution (LGES) have announced their collaboration to establish a state-of-the-art EV battery manufacturing plant in the United States, while taking advantage of the tax breaks offered by the administration to such green initiatives.
With an investment of $4.3 billion, this joint venture (JV) aims to meet the soaring demand for electric vehicles and further solidify the position of both companies in the global EV market. Both LGES and Hyundai Motor Group will each hold a 50 percent stake.
According to a statement, the firms aim to have a yearly production capacity of gigawatt-hours (GWh), which is estimated to power 300,000 EVs in North America. We will create a strong foundation to lead the global EV transition through establishing a new EV battery cell plant with LG Energy Solution, a leading global battery producer, and long-time partner,” said Jaehoon Chang, President, and CEO of Hyundai Motor Company, in a press release.
The battery manufacturing facility will be in Bryan County, Savannah, Georgia, adjacent to Hyundai Motor Group Metaplant America, which is currently under construction.
Tax breaks according to the Inflation Reduction Act
To become eligible for the tax rebate, manufacturers in the US should fulfill their new sourcing requirements concerning EV battery components and minerals. Meeting this requirement will enable such EV buyers to avail tax credits of up to $7,500, which is mandated under the Inflation Reduction Act (IRA).
According to Reuters, the new regulations are part of President Joe Biden’s initiative to have 50% of new vehicle sales in the United States be EVs or plug-in hybrids by 2030 and are intended to lessen the country’s reliance on China for EV battery supply chains.
The construction of this new facility is planned to begin in the second half of 2023, and the joint venture has scheduled to start production at the end of 2025. This is the second JV concerning these brands when it comes to battery manufacturing. In 2021, both parties began building a facility in Indonesia, and production is anticipated to begin in the first half of 2024.
Production to help the Hyundai ecosystem in its transition to EVs
The battery cells produced from the plant will be assembled in Hyundai Mobis, after which it would be shipped to the manufacturing facilities of Hyundai, Kia, and Genesis EV models. “The new facility will help create a stable supply of batteries in the region and allow the Group to respond fast to the soaring EV demand in the U.S. market.”
With the creation of this JV, LGES now has seven battery factories running or being built in the United States, where it is focusing the majority of its efforts on increasing output. LGES wants to deliver cutting-edge products quickly and in large quantities. By doing so, it hopes to hasten the U.S.’s transition to clean energy.
LGES and Hyundai Motor Group have collaborated on the supply of EV batteries for vehicles, including the Elantra Hybrid, Kona Electric, and IONIQ 6 dedicated EVs for a long time. The Hyundai Elantra Hybrid, an LPi hybrid car that debuted in 2009, was the first electric model produced by the Group. The patnership is poised to help the brands to “further strengthen the ties going forward with the EV battery cooperation.”
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