[Featured Stock] DIC, Key Electric Vehicle Components in the US... Growing Alongside Hyundai Electric Vehicles

[Asia Economy Reporter Hyungsoo Park] The stock price of DIC, an electric vehicle parts company that produces reducers and other components, is soaring. It appears that the news of Hyundai Motor Group reorganizing the core of its research and development headquarters, the brain of the group, around electric vehicles to accelerate the transition to electric vehicles has influenced the stock price.

As of 10:52 AM on the 24th, DIC is trading at 5,140 KRW, up 23.86% from the previous day.

According to industry sources, Hyundai Motor Group carried out a research institute organizational restructuring on the 17th, changing the powertrain division within the R&D headquarters to the electrification development division and establishing a battery development center. The Powertrain System Development Center was renamed the Electrification Testing Center, the Powertrain Performance Development Center was renamed the Electrification Performance Development Center, and the Powertrain Support Division was renamed the Electrification Support Team.

DIC is negotiating with its U.S. subsidiary, Daeil USA, to produce and supply parts such as reducers for 300,000 units annually locally starting in the second half of 2024. Major supply destinations are expected to include companies H, G, and T. Currently, DIC supplies all electric vehicle reducers and gears to Hyundai and Kia, and also supplies electric vehicle parts to GM and company T in North America.

Once production in the U.S. is in full swing, sales growth is expected to increase significantly. DIC anticipates local sales to increase by about 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, it expects to grow into a company with nearly 1 trillion KRW in North American sales. In addition to its main reducer parts, the U.S. factory plans to mass-produce some core electrification components.

DIC's local production in the U.S. is a strategic decision in line with the Biden administration's policy to support domestic electric vehicle companies. The U.S. has decided to provide electric vehicle subsidies only for electric vehicles produced domestically after 2027. Furthermore, a bill has been proposed to provide additional subsidies if more than 50% of electric vehicle parts are localized.

DIC's factory in Murray, Calloway County, Kentucky, U.S., holds logistical advantages as it is located midway between major automakers and parts companies. It is 651 to 700 km, about 6 to 7 hours away, from Alabama where Hyundai and Kia are located. It is 936 km, about 9 hours, from Detroit where General Motors (GM) and Ford are located. It is also relatively close, within 7 hours, to automotive parts companies Dana and Germany's ZF.

A DIC official stated, "We selected the location of the U.S. factory considering various advantages such as logistics, workforce conditions, and land and tax benefits provided by the state of Kentucky to resident companies," adding, "We will leap forward as a global electric vehicle parts supplier along with our North American and Chinese factories."