Hyundai Motor Group to Invest 8 Trillion Won in the US to Promote Local Electric Vehicle Production
Samsung, LG, SK Also Accelerate US Investment Expansion
[Asia Economy reporters Changhwan Lee and Heungsun Kim] Hyundai Motor Group will invest about 8 trillion won in the United States to secure future growth engines such as local electric vehicle production, hydrogen infrastructure expansion, urban air mobility (UAM), and robotics.
This is Chairman Chung Euisun of Hyundai Motor Group's strategic move in response to the Biden administration's 'Green New Deal' and 'Buy America' policies. Major companies such as Samsung Electronics, SK, and LG are also planning large-scale investments aligned with the Biden administration.
Hyundai Motor Likely to Produce Core Electric Vehicles like Ioniq 5 in the U.S.
On the 14th, Hyundai Motor Group announced that it will invest a total of $7.4 billion (approximately 8.1417 trillion won) in the U.S. to secure future growth engines including electric vehicle production and facility expansion, hydrogen, UAM, robotics, and autonomous driving.
Hyundai Motor will gradually expand local production facilities and start the first electric vehicle production by next year. Industry insiders expect that through the expansion of the Alabama plant, the Ioniq 5 will be produced first, followed by sequential production of other electric vehicle models.
Hyundai Motor's local electric vehicle production in the U.S. is interpreted as a response to changes in U.S. government policies and the rapid growth of the electric vehicle market. In particular, it is seen as a proactive move to respond to electric vehicle policies linked to the Biden administration's Green New Deal and Buy America strategy.
Earlier this year, U.S. President Joe Biden signed the 'Buy America' executive order immediately after taking office. This order requires U.S. government agencies to obtain approval from the Office of Management and Budget (OMB) when purchasing foreign products or services, aiming to concentrate government procurement worth $600 billion (about 661 trillion won) annually on domestic companies. Additionally, all 440,000 government fleet vehicles will be replaced with American-made electric vehicles.
Accordingly, it is understood that Chairman Chung Euisun of Hyundai Motor Group made a decisive decision to expand investment in the U.S. Last month, Chairman Chung visited Los Angeles (LA) for a week, touring Hyundai Motor's U.S. sales corporation and the Alabama Hyundai plant. At that time, the industry noted his sudden trip to the U.S. ahead of the Korea-U.S. summit and anticipated the possibility of expanding investment in the U.S., including local electric vehicle production.
The surge in electric vehicle demand in the U.S. is also a cause. The industry forecasts that the U.S. electric vehicle market will expand significantly to 2.4 million units in 2025, 4.8 million units in 2030, and 8 million units in 2035.
Furthermore, Hyundai Motor Group announced plans to actively cooperate with the U.S. government and companies to spread the hydrogen ecosystem in the U.S. They will also promote demonstration projects for hydrogen refueling infrastructure based on hydrogen electric trucks with specialized U.S. hydrogen refueling companies. By proactively investing in and advancing businesses related to UAM, robotics, and autonomous driving, they plan to solidify competitiveness in future innovative growth sectors.
A Hyundai Motor Group official said, "Through investment for electric vehicle production in the U.S., we plan to establish a system that can stably supply electric vehicles and secure firm leadership in electrification. This is to respond to new demand for electric vehicles in the U.S., and there will be no transfer of domestic electric vehicle production volume. Domestic plants will continue to serve as key bases for electric vehicles."
Other Companies like Samsung Electronics, LG Energy Solution, and SK Innovation Also Accelerate U.S. Investments
Besides Hyundai Motor, other major Korean companies are also expanding local production in the U.S. Samsung Electronics is planning to add two new lines to its existing foundry (semiconductor contract manufacturing) plant operating in Austin, Texas, and is currently scouting locations. Since last year, Austin, New York, and Arizona have been mentioned as candidates. The new investment is expected to exceed $17 billion (about 20 trillion won).
In line with the expansion of electric vehicle adoption in the U.S., battery supply is expected to be tight, and Korean companies are increasing local investments in this sector. LG Energy Solution plans to invest more than 5 trillion won by 2025 to build 2 to 3 additional battery plants. Separately, it will invest over 2 trillion won in the construction of a plant for Ultium Cells, a joint venture with General Motors (GM).
SK Innovation has finalized battery plants 1 and 2 in Georgia and is in final negotiations to add plants 3 and 4. Samsung SDI is reportedly considering establishing a battery cell production plant in the U.S. and is reviewing sites.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
