As Hyundai races to build its new $7.6 billion EV assembly plant in the US state of Georgia, South Korean tier one supplier, Daechang Seat, has also announced investment to localise production, the latest in a number of similar commitments by Hyundai’s suppliers.
The South Korean carmaker broke ground on the Hyundai Motor Group Metaplant America (HMGMA) facility in October 2022. It is located near the port of Savannah. Hyundai is also building a battery plant alongside the production lines on the 1,200-hectare site and reported this month that construction had begun on all production-related buildings.
“The site is advancing every day as we work diligently to complete what will be one of the most advanced vehicle assembly and battery plants in the world,” said Oscar Kwon, CEO of HMGMA. “We are on track to start production in early 2025, or as my colleague José Muñoz likes to say, ‘if not sooner’.”
Hyundai announced in May that it is partnering with LG Energy Solution in a 50/50 joint venture for the battery cell manufacturing facility at the plant. The battery facility will involve an investment of more than $4.3 billion and will have an annual production capacity of 30 GWh, able to supply annual production at the assembly plant of 300,000 EVs.
Tax incentive
The carmaker is eager to get the site up and running to take advantage of the incentives for localised EV manufacture offered by the US government’s Inflation Reduction Act (IRA). The IRA provides tax credits that save EV buyers up to $7,500 on EVs made in North America with batteries that are locally supplied. It is designed to stimulate greater consumer take up. Those incentives apply to pick-up trucks and SUVs that sell for under $80,000 and sedans that sell for under $55,000.
Hyundai is second only to Tesla in EV sales in the US but has yet to establish EV production in the country supplied by local battery and parts content, potentially putting it at competitive disadvantage with other EV makers that already have production facilities in the US. However, the carmaker is currently supported by the law in that dealers can apply the credit to any leased electric vehicle, regardless of where it is made.
Last year US vice-president Kamala Harris sought to reassure Korean leaders that battery supply chains will not be punitively affected by tax credits in the IRA.
Nevertheless, the carmaker has accelerated its plant production schedule
“What we decided is to double down,” Munoz told reporters at a recent press conference in Atlanta following Hyundai’s signing of a partnership with Georgia Tech aimed at strengthening research into hydrogen-fuelled vehicles. “We try to accelerate as much as possible, the project. And we are confident that the original date of January 2025 would be probably pulled ahead maybe three months or so. If we can, even more.”
Supplier support
In support of local content, its fellow Korean supplier Daechang Seat has also committed $72.5 million in the Savannah Chatham Manufacturing Center, in close proximity to HMGMA.
The manufacturing centre benefits from strong transport links.
“Only minutes from the port of Savannah, [Daechang Seat] is ideally located to take advantage of Georgia’s world-class connectivity,” said Griff Lynch, Georgia Ports Authority (GPA) president and CEO. “At GPA, we’re all-in on providing the best global gateway for US supply chains, and we’re excited to welcome DSC as the latest job creator in Georgia’s automaking sector.”
Daechang Seat already has a plant Phenix City, Alabama, which opened in 2019. Last year nit announced a $23.4m expansion there.
Among the other suppliers to Hyundai that have shown commitment to localised production in Georgia this year are: Sewon Precision Industry, which is investing $300m in a metal stamping plant; Seoyon E-HWA, which plans a $76m plant to make interior and exterior trim parts; Hyundai Mobis, which is investing $926m in a powertrain plant; Joon Georgia, which is investing $317m in a plant to make vehicle frames; and Ecoplastic which is investing $205m in a plant to make interior and exterior plastic parts, including bumpers, consoles, trims, and plastic moulds.
According to the Georgia Department for Economic Development, suppliers attracted by Georgia’s mobility original equipment manufacturers (OEMs) scheme resulted in over $2 billion in investment across the state in fiscal year 2023.
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