Hyundai's IONIQ 5 / Courtesy of Hyundai Motor Group

By Kim Hyun-bin

Following the announcement of a midium- to long-term strategy by Hyundai Motor and Kia to sell a total of 3.07 million electric vehicles (EV) in 2030, now all eyes are on how the country's leading carmaking group will secure the supply for production on such a large scale.

According to the two companies, the annual demand for EV batteries is set to reach a total of 289 gigawatt-hours (GWh) by 2030. This figure is more than the annual battery production capacity of the top three domestic battery makers, LG Energy Solution (155 GWh), SK On (40 GWh) and Samsung SDI (42 GWh), combined. However, the three companies are investing heavily in expanding production. LG Energy Solution (LGES) plans to expand its capacity to by 2025 400 GWh, SK On to 220 GWh, and Samsung SDI to 110 GWh.

Hyundai Motor and Kia are expected to establish joint battery factories close to their overseas production bases with LG, SK and Samsung, or to form additional partnerships with foreign battery companies to meet the rising EV demand

In addition, the company will need to find a means to lower battery procurement costs, as they account for a significant portion of the total EV cost, so as to raise profitability.

Experts say that Hyundai and Kia will need to strengthen their partnerships with the three domestic battery companies and global top-tier battery makers, such as CATL in China, to secure a stable supply, and to form a local EV production cluster.

A leading example is the 10GWh battery cell plant that Hyundai Motor Group is scheduled to establish in Indonesia as a joint venture with LGES.

The battery cell plant is scheduled to be in operation from 2024, which will make it possible to supply lithium-ion batteries for 150,000 EVs per year, establishing a complete local production system.

Hyundai Motor is pursuing strategic alliances with battery makers in other major markets as well, including the U.S. The company plans to procure 50 percent of the next-generation lithium-ion batteries after 2025 in this way.

"As the EV market is growing faster than expected, the battery market is also forming a supplier advantage," an auto industry official said. "In order to increase the sales of EVs, carmakers will need to focus on battery supply and demand as much as developing new vehicles."

Hyundai and Kia also announced plans to diversify their battery suppliers. Currently, they are receiving batteries from CATL, the world's largest battery maker, in addition to the three domestic battery companies, but they are planning to expand their supply lines from other companies.

Analysts point out that efforts to improve battery performance and lower prices are also necessary to secure price competitiveness and profitability in the EV market.