Hyundai, SK battery JV may receive up to $700 mn in US grants

Hyundai Motor Co. and SK On Co. could receive up to $700 million in US tax breaks and grants for their electric vehicle battery plant under construction in the US state of Georgia, according to a media report.

Both companies launched a 50:50 joint venture earlier this year to build a battery cell factory for $5 billion in Bartow County, northwestern Georgia. They aim to complete the factory by the second half of 2025.

The five-year incentives to be provided by the local and state governments could total $700 million, the Atlantic Journal-Constitution said on Tuesday, citing documents it obtained through the Georgia Open Records.

The incentive package includes $247 million in local property tax breaks over 20 years; $98 million in project tax credits; $46 million to build a water treatment plant; $40 million in grants; and $11 million in worker training.

The facility is expected to employ at least 3,750 workers, with an annual capacity of 35 gigawatt-hours of batteries, enough for 300,000 EVs.

The batteries to be produced by the JV will be supplied to factories of Hyundai and Kia near the plant, including one in Montgomery, Alabama.

Hyundai and SK On will equally split half of the construction cost of $2.5 billion, with the remaining $2.5 billion to be borrowed by their JV.

Hyundai Motor Group, the parent of the namesake carmaker and Kia Corp., has been pouring several billions of dollars to build new facilities in Georgia.

In addition to the JV battery plant with SK On, the automotive group is now building EV-dedicated manufacturing and battery production facilities for $5.5 billion in the state's Bryan County.

Kia Motor is running a separate plant in West Point, Georgia.

US TAX CREDITS

Hyundai Motor said all EVs of Hyundai and Kia to be manufactured in the US, embedded with batteries from its and JV's Georgia plants, will qualify for US tax credits from 2026, when the JV battery plant will be up and running.

They will meet the requirements under the US Inflation Reduction Act that EVs must be assembled in North America and a certain percentage of their battery parts and minerals should not come from a country of concern such as Russia and China.

For its part, SK On will be eligible for the benefits of advanced manufacturing production tax credit, a tax deduction of $35 per kilowatt hour for battery cells manufactured in the US.

Write to Il-Gue Kim at Black0419@hankyung.com

Yeonhee Kim edited this article.