Hyundai Announces New EV Battery Partnership In The US

Electric Vehicles / Comments

A partnership with SK On for local battery production will earn it tax rebates under Biden's Inflation Reduction Act.

Hyundai and SK On have signed a memorandum of understanding (MOU) which outlines the strategic partnership the two companies will take to secure an ample supply of EV batteries in the US.

Under the MOU, both parties will cooperate to build the batteries that will find their way into Hyundai cars by 2026. This news comes a few days after rumors of the partnership were swirling. Nothing has been confirmed, but in those reports, the plant is estimated to cost about $1.88 billion and will produce 20-gigawatt hours of batteries per year which can power 300,000 vehicles. This means that future models like the Ioniq 7 will have US-made batteries.

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Further details are set to come out in the near future, but it seems to be a very promising venture for the company. According to Heung-soo Kim, Executive Vice President and Head of the Corporate Future Growth Planning Division & EV Division of Hyundai Motor Group, "Through the EV battery MOU, we will be able to further accelerate our efforts to secure EV leadership in the North American market. We expect the stable supply of EV batteries from SK On will also enable us to contribute to emissions reduction and meet climate goals in the market."

This plant will also complement the new vehicle manufacturing plant that Hyundai is breaking ground on soon in Georgia. That plant will cost $5.5 billion and be able to produce 300,000 vehicles annually.

"We expect the cooperation between SK On and Hyundai Motor Group to create a big synergy," SK On Chief Administrative Officer Choi Young-chan said. "Both sides can hold a solid position in the process of electrification in the North American auto market."

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The benefit of these plants is two-pronged. First, It will be the company's EV manufacturing hub in the US, and the first step of a commitment to invest $10 billion in the country by 2025. On a larger scale, the company also aims for a 7% share of global electric vehicle sales by the decade's end, with a goal of 3.23 million fully electric vehicles.

Secondly, this investment will help Hyundai's vehicles qualify for the new, more stringent tax credit rules due to the recently passed Inflation Reduction Act. The new rules require that at least 40% of the monetary value of minerals for battery components originate either from the US or from a US free-trade partner to qualify for the tax credits. By 2027 this is going to rise to 80%.

Here's hoping the partnership turns out to be a fruitful one. There are also some other reports that Hyundai is in talks with LG about building additional battery plants as well, so there's a possibility that we'll see an explosion of Hyundai projects in the US soon.

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