Hyundai Motor, LG Energy to build $4.3 billion battery cell plant in Georgia

Industry

Published: 26 May. 2023, 17:23 Updated: 28 May. 2023, 17:13

Hyundai Motor, LG Energy to build $4.3 billion battery cell plant in Georgia

Hyundai Motor CEO Chang Jae-hoon, left, and LG Energy Solution Vice Chairman and CEO Kwon Young-soo pose for a photo during a joint venture signing ceremony at LG Energy Solution headquarters in Yeouido, western Seoul, on Friday. [HYUNDAI MOTOR GROUP]

Hyundai Motor Group and LG Energy Solution will build a 5.7 trillion won ($4.3 billion) new battery cell plant together in the United States, as part of a major push to counter the Inflation Reduction Act (IRA).

The two companies signed an agreement Friday, promising to invest 5.7 trillion won in the 50:50 joint battery plant in Savannah, Georgia, where Hyundai is already constructing an electric vehicle (EV) factory.

Ground will be broken in the second half of the year, with the goal of starting mass production as early as late 2025.

The new plant will have a 30 gigawatt-hour production capacity, enough to power 300,000 EVs each year.

Battery cells made from the plant will be packaged into battery packs by Hyundai Mobis and be supplied to EVs produced in the United States including Hyundai's Alabama plant and Kia's Georgia plant.

The latest investment is the second joint venture between Hyundai Motor and LG Energy Solution. They are already building a 10 gigawatt-hour plant in Karawang Regency, Indonesia, which is slated to begin mass production in the first half of next year.

The relationship between the two companies started in 2009 when the Korean automaker rolled out the Avante LPi Hybrid, or Elantra, its first liquefied petroleum gas hybrid compact sedan. LG Energy supplies batteries to Hyundai's Kona Electric SUVs and Ioniq 6s.

“Hyundai Motor Group 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 Hyundai Motor CEO Chang Jae-hoon.

The establishment of the joint venture comes as the Biden administration restricts the use of batteries made in China when providing up to $7,500 tax credits for buyers for EVs assembled in the North America.

Hyundai Motor in late April announced it would build a $5 billion EV battery factory with SK On in Bartow County, Georgia,

Under the 50:50 joint venture, the plant will have a 35 gigawatt-hour production capacity, which is enough to power 300,000 EVs.

LG Energy Solution is set to have eight battery plants in North America, the largest number for any battery company. LG Energy will have around 324 gigawatt hours of production capacity in total by the end of 2025, which is enough to produce 3 million EVs.

“Hyundai Motor Group and LG Energy Solution will join hands to lead the North American EV market,” said Kwon Young-soo, vice chairman and CEO of LG Energy Solution. They will provide world-class customer value by sharpening their distinct production capacity and product competitiveness, Kwon added.

Under the IRA, in order to qualify for $3,750 of the credit, 40 percent of the critical-mineral value of the vehicle’s battery has to come from the United States or countries with which the United States has signed free trade agreements.

For the other $3,750, 50 percent of the battery-component value will have to come from the United States.

The percentage increases by the year and will eventually reach 100 percent.

BY SARAH CHEA, SOHN DONG-JOO [chea.sarah@joongang.co.kr]