South Korea’s Hyundai Motor Group signed an agreement to source electric vehicle batteries in North America from battery maker SK On, said the companies.
The partnership follows the signing in August of the Inflation Reduction Act (IRA), requiring automakers to source a certain percentage of critical minerals for their EV batteries from the US or in countries with US free-trade partners to qualify for the new electric vehicle tax credits, as per Channel News Asia.
SK Innovation Ltd’s battery unit SK On said that under the terms of the memorandum of understanding (MOU), it will offer its batteries to the automaker’s plants in the US after 2025 for EV production.
It said the partnership would allow the two firms to better meet the US tax credit qualifications required by the IRA.
40% of critical battery materials should be from the US from 2023
From 2023, at least 40% of the value of critical minerals for batteries will have to come from the US or a US free-trade partner to receive EV tax credits of up to $7,500 per vehicle, a threshold set to grow to 80% in 2027.
“We expect the stable supply of EV batteries from SK On will also enable us to contribute to emissions reduction and meet climate goals in the market,” said Hyundai.
As the new law requires EVs to be assembled in North America to qualify for the tax credits, Hyundai Motor Co, its affiliate Kia Corp, and major European automakers were excluded from the subsidies as they don’t yet make the vehicles there.
South Korea’s trade ministry said that Hyundai Motor was considering producing EVs at its existing factories in America to qualify for US federal EV tax credits.
Hyundai’s EV & battery plant in Georgia
In October, the car company broke ground on a new EV and battery plant in Georgia, aiming to start commercial production in the first half of 2025 with 300,000 units of annual capacity.
