Plan to Expand Volume to 300,000 Units Annually in 2024 and 3 Million Units Annually by 2029
[Asia Economy Reporter Lim Jeong-su] DIC, an electric vehicle parts company that manufactures reducers and other components, is confirmed to be in discussions to produce and supply approximately 300,000 electric vehicle parts at its newly constructed factory in Kentucky, USA. If the order contracts proceed as planned, the recently completed US factory will supply a large volume of electric vehicle parts to local automakers.
According to industry sources on the 21st, DIC’s US subsidiary, Daeil USA, is negotiating to produce and supply parts such as reducers for 300,000 units annually starting from the second half of 2024 locally. Major clients are expected to include companies H, G, and T. Currently, DIC supplies all electric vehicle reducers and gears to Hyundai Motor and Kia Motors, and in North America, it also supplies electric vehicle parts to GM and company T.
Once US production is fully underway, sales growth is also expected to be significant. DIC anticipates that local sales will increase by approximately 300 billion KRW starting at the end of 2024 when production reaches 300,000 units, and if supply volume grows to 3 million units by 2029, North American sales could approach 1 trillion KRW. The US factory plans to mass-produce not only its core reducer parts but also some key electric motor components.
DIC’s local production in the US is a strategic decision aligned with the Biden administration’s policy to support domestic electric vehicle companies. The US has decided to provide subsidies only for electric vehicles produced domestically after 2027. Additionally, legislation has been proposed to grant extra subsidies if more than 50% of electric vehicle parts are localized.
Producing both vehicles and parts locally in the US reduces tariffs on current production and allows companies to benefit from various subsidies, making localization essential. A DIC official explained, "A structure has been formed that is absolutely advantageous for parts companies producing locally in the US," adding, "It was a decisive move because it is difficult to secure price competitiveness without local production."
DIC’s factory in Murray, Calloway County, Kentucky, is strategically located at a midpoint among major automakers and parts companies, offering logistical advantages. It is 651?700 km (6?7 hours) from Alabama, where Hyundai Motor and Kia Motors are located. It is approximately 936 km (about 9 hours) to Detroit, home to General Motors (GM) and Ford. It is also within 7 hours of automotive parts companies Dana and Germany’s ZF, making it relatively close.
The labor supply conditions are also evaluated as favorable. Although Murray city’s population is only about 20,000, the employable population reaches 200,000 when including six surrounding counties. Nearby are Murray State University, an engine factory (lawnmower), and vehicle engine parts companies, providing advantageous conditions for securing skilled labor.
A DIC official stated, "We selected the location of the US factory considering not only logistics and labor conditions but also various advantages such as land and tax benefits provided by the state of Kentucky to resident companies," expressing confidence that "Along with our North American and Chinese factories, we will leap forward as a global electric vehicle parts supplier."
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