Kim Heung-soo, vice president of Hyundai Motor's EV business division, left, poses with Choi Young-chan, SK On Chief Administrative Officer, after signing a memorandum, of understanding (MOU) for cooperation in supplying EV batteries in North America at the SK Serin building in Seoul, Tuesday. Courtesy of Hyundai Motor Group

By Kim Hyun-bin

Hyundai Motor is actively considering establishing a joint manufacturing plant in the U.S. with key battery makers, such as SK On and LG Energy Solutions (LGES), to better cope with the implementation of the Inflation Reduction Act (IRA), according to industry officials, Tuesday.

Hyundai Motor Group and SK On signed a memorandum of understanding (MOU), Tuesday, to expand into the U.S. electric vehicle market. Based on the strategic alliance, the two sides decided to pursue a plan to supply SK On batteries at Hyundai Motor Group's EV plant in the U.S. after 2025, while specific details, such as supply quantity and type of cooperation, will be discussed later.

"This agreement on battery supply in North America will help us accelerate our advance into the EV market," Kim Heung-soo, vice president of Hyundai Motor's EV business division, said after signing the MOU at the SK Serin building in Seoul, Tuesday.

The move comes as Hyundai Motor needs to secure a smooth battery supply, as electric vehicle (EV) demand in the U.S. is expected to increase significantly in the future following the IRA.

There are reports that Hyundai Motor has agreed to establish a joint battery plant in the U.S. with SK On, with an initial production scale of 20 GWh per year, which is enough for up to 300,000 electric vehicles per year.

The location of the plant is being discussed in the U.S. states of Alabama and Georgia where Hyundai Motor's production plants are located.

Through this, the two companies can more actively respond to the IRA, which provides subsidies only to buyers of EVs equipped with batteries manufactured in North America.

Hyundai Motor has been supplied with EV batteries from SK, LG, and CATL of China. But in the U.S., the Korean carmaker will have to increase cooperation with Korean battery makers instead of CATL to benefit from the IRA.

Hyundai Motor and Kia Corp. set medium- to long-term sales targets of 830,000 EVs in the U.S., which requires the mass production of 60 GWh of batteries per year. To achieve this, experts believe Hyundai Motor needs to build at least three battery cell factories with an annual capacity of 20 GWh in the U.S. through joint ventures with key battery companies.

"We are discussing diverse cooperation with many companies, but nothing has been set," a Hyundai Motor official said.

Last month, Hyundai Motor held a groundbreaking ceremony for Hyundai Motor Group Metaplant America (HMGMA), an EV-only plant in Georgia.

Hyundai Motor Group plans to invest $5.5 billion in the construction of the HMGMA plant to produce 300,000 EVs annually from the first half of 2025.

Currently, Hyundai Motor Group operates a manufacturing plant in Alabama, while affiliate Kia runs a factory in Georgia.