FAR EAST: SOUTH KOREA REPORT
South Korea’s Hyundai Motor Group and LG Energy Solutions said they plan to build a joint automotive battery plant in the United States.
They will split the total investment of $4.3 billion (about 600 billion yen) on a 50-50 basis and plan to start operations by the end of 2025. As conditions for EV subsidies in the U.S. become clearer, several local investment plans are in the works.
The new plant will be built in Bryan County, Georgia. With a standard production capacity of 30 gigawatt-hours per year, it will be able to supply batteries for approximately 300,000 EVs. In addition to Hyundai Motor’s dedicated EV plant in Georgia, the plant will also supply batteries to Kia’s plant in Georgia and Hyundai Motor’s plant in Alabama.
LG Energy decided to supply the batteries to the three plants in Georgia due to the high transportation costs of the heavy on-board batteries.
This will be LG Energy’s eighth battery plant in North America. LG Energy has operated or built two of its own plants, plus three joint ventures with GM, and one each with Honda and Stellantis. The U.S. plant will be the company’s second joint venture in the world, following a joint venture with Hyundai Motor in Indonesia.
The U.S. government subsidizes U.S.-made electric vehicles to improve the supply chain in the country. With the U.S. government subsidizing U.S.-made EVs, there has been a flurry of plans to build battery plants in the North American region.
Source: The Nikkei
PSR Analysis: The U.S. EV subsidy policy is so large that many automakers and battery manufacturers, including South Korea, are aggressively expanding their plants in North America because it is price competition in North America will be heavily influenced by whether or not they are eligible for these subsidies.
At the same time, however, I believe that overinvestment in battery supply capacity is possible. Every month I see reports of battery plants being built somewhere in the world, and while various types of next-generation vehicle technologies, such as PHVs and FCVs, are being considered for development, the European-led policy centered on BEVs is currently leading the world. However, BEVs are not a perfect solution. Issues such as materials sourcing and disposal of used batteries remain.
Even if the trend toward BEVs continues, the automotive battery industry may face structural overcapacity and fierce competition. While large battery manufacturers may be able to secure enough orders to fill their own production capacity, medium-sized and smaller companies will be at risk of being eliminated. Chinese and Korean battery manufacturers, which are more likely to receive full support from their own governments or have large capital resources, are likely to absorb most of the demand. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
