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SEOUL, May 26 (Yonhap) -- South Korea's Hyundai Motor Group and LG Energy Solution Ltd. said Friday they will invest 5.7 trillion won (US$4.3 billion) in a battery cell plant in the United States in the latest move to better deal with the Inflation Reduction Act (IRA) amid growing demand for electric vehicles.
The two companies will set up a 50:50 joint venture within this year to build the plant with an annual capacity of 30 gigawatt-hours, enough to power 300,000 EVs, near Hyundai Motor Group's dedicated electric vehicle (EV) and battery plant under construction in Georgia, they said in separate statements.
They plan to begin the plant's construction later this year with an aim to start production in late 2025.
"Hyundai Motor Group is shifting its focus to electrification and aims to become a leader in the global EV market based on the battery cell plant project," Hyundai Motor President and Chief Executive Officer Chang Jae-hoon said in a statement.
LG Energy Solution CEO Kwon Young-soo said two leaders in the auto and battery industries have joined hands to take the lead in the North American EV market.
The joint company will supply battery cells for EVs manufactured at Hyundai Motor Co.'s Alabama plant, its smaller affiliate Kia Corp.'s Georgia plant, and the upcoming dedicated EV and battery plant named the Hyundai Motor Group Metaplant America (HMGMA), they said.
The move comes as the IRA provides tax credits of up to $7,500 to buyers of EVs assembled only in North America, sparking concerns that Hyundai Motor and Kia could lose ground in the U.S. market, as they make most of their EVs at domestic plants for export to the U.S.
In October, Hyundai Motor Group began the construction of a 300,000-unit-a-year EV and battery plant in Georgia, aiming to begin commercial production in the first half of 2025.
Early this year, Hyundai Motor began to produce the all-electric GV70 SUVs under its independent Genesis brand at the Alabama plant.
Last month, Hyundai Motor Group and SK Group's battery unit SK On announced they will build a 6.5 trillion-won EV battery plant in Bartow County, Georgia, with a goal to start production in the second half of 2025.