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Hyundai Motor has concluded a $5 billion electric vehicle (EV) battery joint venture in the U.S. with partner SK to further electrification ambitions in its biggest market.
As part of the partnership, both South Korean companies will have an equal ownership stake in the plant that will be constructed in Bartow County, Georgia.
Hyundai Motor Grows Its U.S. Footprint
Hyundai Motor Co. announced a $5 billion joint venture in North America with partner SK as President Biden’s green bill encourages businesses along the EV supply chain to invest in the country.
Under the electric vehicle (EV) batteries joint venture, the two firms will see the establishment of a new battery manufacturing facility in Georgia, formalizing an earlier tentative arrangement.
The announcement came as South Korean President Yoon Suk Yeol arrived in Washington for his first state visit to the United States in 12 years.
Yoon was accompanied by top executives from South Korea’s largest corporations, including Hyundai Motor Group Executive Chair Euisun Chung.
The Hyundai and SK Georgia factory is expected to start producing battery cells in the second half of 2025, with a 35 gigawatt-hour annual production capacity, to support the production of 300,000 EVs.
The South Korean companies will have an equal stake in the Georgia facility, which will be built in Bartow County.
The action is per the new U.S. sourcing standards for EV battery components and essential minerals, allowing car buyers to receive up to $7,500 in credits under the Biden administration’s Inflation Reduction Act (IRA).
On the other hand, the eligibility for the tax credit is an entirely different matter. The bill adds several new standards, such as personal adjusted gross income, the location of the EV’s manufacturing facility, and the sticker price.
Hyundai and its sibling firm, Kia Corporation, are not qualified for the tax benefits.
According to Hyundai, the joint venture strengthens the group’s position as an EV leader in the U.S. market with a reliable battery supply.
The automaker inked a memorandum of understanding with SK On in November 2022 to guarantee battery supply for North America.
Hyundai SUVs Boost Earnings
Hyundai’s net profit from January through March was 3.3 trillion won ($2.47 billion), an increase from 1.6 trillion won in the previous year.
This was due to a surge in vehicle output due to a reduction in the global chip shortage and continued high demand for its high-margin SUVs.
Revenue increased by 25% to 37.8 trillion won, and the automaker’s gross margin was 20.4 percent, exceeding the market target of 18.2%. The operating profit margin was 9.5%.
According to Hyundai, the increased output as chip and component supplies stabilized globally was a major factor in the good sales.
The company continued by pointing out that it sees enduring external concerns, such as rising inflation, fluctuating raw material prices, and interest rates brought on by geopolitical issues.
According to Reuters, Seo Gang Hyun, chairman of Hyundai’s strategy and finance division, stated that conventionally powered SUVs and the opulent Genesis sedans continued to account for a sizable portion of the company’s sales in the United States.
In response to analyst questions on the subject, he added that the effect of the Inflation Reduction Act (IRA) would not be as substantial as people are concerned about.
He also explained that Hyundai increased leasing sales to 35% of all EV sales in the United States by the end of March to capitalize on the new legislation as much as possible.
The U.S. Treasury Department announced in December 2022 that it would classify leased cars and trucks as commercial vehicles, exempting them from the IRA’s sourcing rules.
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