Hyundai Industrial is showing strength. The news that Hyundai Motor Group is establishing a battery joint venture with SK On in Georgia, USA appears to be influencing the stock price. Hyundai Motor Group plans to procure battery cells optimized for vehicles produced in the US locally through this joint venture with SK On, enabling timely production and sales of electric vehicles. Recently, with the implementation of the Inflation Reduction Act (IRA) in the US, local production of batteries in North America has become mandatory. Previously, the GV70 produced at the Alabama plant met the North American origin requirement, but it was excluded from subsidies because SK On's batteries installed in the vehicle had battery cells made in China.
As of 3:10 PM on the 25th, Hyundai Industrial is trading at 8,600 KRW, up 9.14% from the previous day.
On the same day, Hyundai Motor Group held a regular board meeting and announced that both companies approved a plan to jointly invest a total of 5 billion USD (approximately 6.5 trillion KRW) to build a battery cell joint factory with SK On in Bartow County, Georgia, USA. Both companies will hold 50% equity each.
The battery cells produced at the battery factory will be assembled into battery packs by Hyundai Mobis and supplied entirely to electric vehicles produced in the US by Hyundai Motor, Kia, and Genesis. Hyundai explained that the battery factory is located 189 km from Kia's Georgia plant and 304 km from Hyundai Motor's Alabama plant, and also has accessibility to Hyundai Motor Group's dedicated electric vehicle factory to be completed in 2025 (460 km), which is advantageous for supply chain management.
Research Alom expects Hyundai Industrial to benefit as Hyundai Motor and Kia pursue a strategy to produce electric vehicles and parts locally in the US.
Researcher Lee Seung-hwan of Research Alom explained, "Hyundai Motor and Kia plan to produce not only production facilities but also most vehicle parts such as batteries and key materials in the US," adding, "This is a measure to respond to the US Inflation Reduction Act (IRA), which provides subsidies only for US-made electric vehicles."
He said, "Most vehicle parts except batteries are already planned to be supplied as US-made," and "Parts manufacturers producing locally in the US will benefit."
Researcher Lee analyzed, "Hyundai Industrial purchased a new factory and logistics warehouse in Newnan, Georgia, earlier this year with an investment of about 13.1 billion KRW," and "Production facilities will be established by the first half of this year, and operations are expected to start in the second half."
He added, "The main production items are armrests, headrests, and leg rests," and "The annual production capacity is about 300,000 units." Furthermore, he emphasized, "They have already secured orders for many electric vehicles such as the Ioniq 5 and Ioniq 7, which Hyundai and Kia plan to produce in the US," and "They aim to secure full orders for about 10 new electric vehicle models to be mass-produced in the future."
Researcher Lee stated, "Hyundai Industrial is the only company producing the above products locally in the US," and "It is fully possible to secure full orders for new electric vehicles." He continued, "Hyundai Industrial is the only company producing armrests, headrests, and leg rests locally in the US," and "Securing full orders for new electric vehicles is fully achievable."
Hyundai Industrial is estimated to achieve sales of 317.1 billion KRW and operating profit of 19.2 billion KRW this year, representing increases of 13.9% and 27.7%, respectively, compared to last year. Researcher Lee said, "Due to the characteristics of the automotive industry, the highest profit margin is generated within three years after new car launches," and "Since major production models such as the G90, Grandeur, K7, EV6, Ioniq 6, and Starex were launched in the second half of last year, profit margins are expected to be high this year."
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