Hankook Tire to spend $1.6 bn on US plant expansion

Hankook Tire & Technology Co., South Korea’s top tire maker, will invest $1.6 billion to more than double its output in the US, the world’s second-largest automobile market, to deal with Washington’s decision to provide tax credits only for electric vehicles made in North America.

Hankook announced on Monday its board of directors has decided to raise the production capacity of its Tennessee factory to 12 million tires per year from the current 5.5 million units. The plant, which manufactures tires for passenger cars and light trucks, will be able to make products for commercial vehicles after the expansion.

The company plans to complete the extension works and begin mass production in the first quarter of 2026 but partially operate the expanded facility from the fourth quarter of 2024 during the construction.

US EV TIRE DEMAND TO GROW ON IRA

Hankook expected demand for EV tires in the US to increase as the country is set to offer a $7,500 tax credit for EVs assembled in North America or using critical minerals and components that are sourced domestically or from the country’s free-trade-agreement partners through the Inflation Reduction Act.

EV tires can be manufactured on internal combustion engine car tire production lines by mixing raw materials such as rubber at different ratios.

“We may increase the output of EV tires at the requests from carmakers there,” said a Hankook official in Seoul.

North America is Hankook’s second-largest overseas market, making up 28% of total sales, after Europe.

The capacity expansion is predicted to help Hankook deal with the US anti-dumping tariff of 27.05% and higher freight costs that hurt its earnings this year.

Write to Hyung-Kyu Kim at khk@hankyung.com
Jongwoo Cheon edited this article.