Hyundai Mobis to spend $1.3 bn to build US EV parts, module plants

South Korea’s top auto parts maker Hyundai Mobis Co. will spend $1.3 billion until 2030 to build auto parts and module plants for electric vehicles in the US as the Joe Biden administration favors EVs made in the country.

As part of the investment, the auto parts-making unit of Hyundai Motor Group at its board meeting on Wednesday approved the company’s plan to inject $280 million into Mobis America (MAI) to expand the US affiliate’s capital base.

MAI, using its own capital and funds to be raised in the US financial market, will build an auto parts factory and a module plant near Hyundai Motor Co.’s new EV plant in the US state of Georgia.

The automotive group also plans to ramp up its existing car manufacturing plants in Alabama and Georgia.

“This investment, designed to strengthen our cooperation with affiliates Hyundai Motor and Kia Corp., will facilitate our efforts to enhance Hyundai’s presence in the US EV market,” said a Hyundai Mobis official.

Hyundai Motor Group aims to take 12% of the global EV market by 2030 by selling 3.23 million electric cars a year by then.

In the US market, which accounts for about 26% of the global EV sales, Hyundai targets to sell 840,000 electric cars a year.

US TAX BENEFITS FOR EVs, BATTERIES

The $1.3 billion investment plan by Hyundai Mobis is part of the automotive group’s $10.5 billion spending scheme unveiled in May when US President Biden visited Seoul to urge Korean business leaders to invest more in his country.

At the time, the group said as part of the $10.5 billion investment, it will spend about $5.5 billion on building its first dedicated electric vehicle and battery manufacturing facilities in Georgia in line with the Biden administration’s goal of 40-50% zero-emission vehicle sales in the US by 2030.

Hyundai earlier said it plans to complete the construction of the new Georgia plant by 2025, but industry officials said on Thursday the automaker will likely advance its schedule to start commercial production of the plant in the second half of 2024.

The move comes as the Korean government, carmakers and battery manufacturers are scurrying to work out measures to respond to the Inflation Reduction Act (IRA), which took effect in mid-August to allow tax credits for EVs that use batteries made in North America with minerals mined or components made in the region or the US' free trade partners.

The act, aimed at diminishing China’s power in the global EV market, is expected to impact Korea’s finished car makers. Hyundai Motor Group’s main EVs, such as the IONIQ 5 and the EV6, are manufactured in Korea and exported to the US market.

Write to Han-Shin Park at phs@hankyung.com
In-Soo Nam edited this article.