[Collapse of Trade Theory, New Supply Chain Era]④ After Trump's Administration, Rush of Korean Factories to the US... 14 New Battery Plants Established

Expansion of Mega Project Investments in the United States
Accelerated Localization of Battery and Automobile Production
Strengthening Protectionism... Movement Toward U.S. Clustering Among Companies

Editor's NoteThe tariff war triggered by the 'Trump administration' is shaking the global supply chain. Since the establishment of the World Trade Organization (WTO) in 1995, globalization, which had been sustained for 30 years based on low tariffs, has entered a path of decline. Instead, localization, which has risen after the COVID-19 pandemic, is beginning to take hold as the new trend. In the past, 'optimal cost' was the top priority in building supply chains, but now minimizing supply risks has become the foremost priority for companies. Especially through two terms of the Trump administration, there is a trend of production bases being established centered on the North American market. Korean companies are at a crossroads, wondering whether to overhaul their production strategies according to U.S. trade policies or to pioneer new markets. Asia Economy conducts an in-depth analysis in six parts on how our companies are responding amid the tectonic shifts in the global supply chain.

Near Savannah, Georgia, USA, Hyundai Motor Group's mega factory 'Metaplant America (HMGMA)' is located on a vast site. This enormous factory, capable of producing 300,000 electric vehicles annually, is set to begin full-scale operation in the first quarter of this year. Even before official operation, electric vehicles undergoing test runs are cautiously moving throughout the factory, heralding the arrival of a new era. This massive production facility, built in just three years, was established with a total investment of $7.6 billion (approximately 11 trillion KRW). It is a state-of-the-art smart factory integrated into a single process from battery assembly to final completion. Compared to Hyundai Motor's Ulsan plant, which took 50 years to build a production capacity of 1.4 million units, this facility was established at an overwhelming speed.

Metaplant, playing a key role in Hyundai Motor's North American strategy, is a large-scale project far exceeding the $1 billion threshold mentioned by U.S. Secretary of Commerce Gina Raimondo, and is expected to become a central hub of the automotive industry in the United States. Hyundai Motor CEO Jose Munoz recently stated on his social media, "Hyundai Motor Group has invested $20.5 billion in the U.S. and created more than 570,000 high-wage jobs," adding, "We are making meaningful investments to help develop local communities for the U.S. and Americans, and through this, we will achieve sustainable growth."

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Large-scale projects exceeding $1 billion, known as 'Mega Projects,' are leading the entry of domestic companies into the U.S. market. Samsung Electronics ($37 billion), SK Hynix ($3.87 billion), and others have also recorded investment scales exceeding U.S. government requirements, strengthening their positions amid the protectionist policies of the second Trump administration.

A battery industry insider said on the 27th, "Since the start of Trump's second term, the impact of tariffs cannot be overlooked," adding, "Existing U.S. factories are becoming larger and evolving into mega plants." This means that efforts to expand local production are accelerating in consideration of tariff burdens.

Battery companies are strengthening cooperation with automakers and expanding local production facilities. Especially since batteries are heavy and bulky, incurring enormous costs during long-distance transportation, it is essential to build battery factories close to automobile manufacturing plants. This is the background for both the enlargement of automobile plants in the U.S. and the mega-plant scale of battery factories.

Currently, the three domestic battery companies?LG Energy Solution, SK On, and Samsung SDI?operate or are constructing a total of 16 production bases in the U.S. Since the Trump administration began (2017 to present), 14 new factories have been established. LG Energy Solution operates or is building seven factories in places including Holland, Michigan, and Ohio. The Ultium Cells factory located in Lordstown, Ohio, received an investment of $2.3 billion (approximately 3.2 trillion KRW), and SK On, which is pursuing six battery factories in the U.S., invested $2.6 billion (approximately 3.7 trillion KRW) in the SB America plant in Georgia. This facility began full operation in 2021. They supply batteries to major automakers such as Hyundai and Ford and have been continuously expanding production capacity recently. Samsung SDI currently operates three battery factories in the U.S. The joint venture plant with Stellantis in Indiana is a core facility with an investment of $2.5 billion (approximately 3.6 trillion KRW), aiming for operation in 2025.

Battery experts agree that the mega-plant trend is inevitable going forward. Although investment speed has been adjusted due to the electric vehicle chasm (a temporary demand slowdown before mass adoption), the long-term restructuring of the supply chain centered on the U.S. cannot be reversed. According to market research firm Freedonia Group, the U.S. electric vehicle battery market size is expected to grow from $7.1 billion (9.8 trillion KRW) in 2021 at an average annual rate of 12% to $12.8 billion (17.6 trillion KRW) in 2026. A battery industry insider said, "We are already operating and building many factories in the U.S.," adding, "As protectionist policies strengthen, the effect of early investment entry will become even greater."

Jo Cheol, Senior Research Fellow at the Korea Institute for Industrial Economics & Trade, explained, "As the need for parts suppliers to enter alongside automakers grows, clusters in the U.S. are inevitable," adding, "Since the U.S. government is mentioning tariffs on materials used in parts, there is a need to produce these locally in the U.S." He said, "Because policy uncertainty remains high, it is difficult for companies to set uniform investment directions, but concerns will grow further for large-scale long-term investments."