Hyundai Motor, SK On sign EV battery pact for North America
SEOUL: South Korea’s Hyundai Motor Group has signed an agreement to source electric vehicle (EV) batteries in North America from battery maker SK On, the two companies said on Tuesday.
The partnership follows the signing in August of the US Inflation Reduction Act, which will require automakers to source a certain percentage of critical minerals for their EV batteries from the US or a US free-trade partner to qualify for new US EV tax credits.
SK Innovation Ltd’s battery unit SK On said that under the terms of the memorandum of understanding (MOU), it will provide its batteries to the plants of the auto group in the US after 2025 for electric vehicle production.
The company said the partnership between the two firms will allow them to better meet the US tax credit qualifications required by the Inflation Reduction Act.
From next year at least 40% of the value of critical minerals for batteries will have to come from the US or a US free-trade partner in order to receive US EV tax credits of up to $7,500 per vehicle, a threshold set to rise 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,” Hyundai said.
As the new law requires EVs to be assembled in North America to qualify for the tax credits, Hyundai Motor Co and its affiliate Kia Corp, as well as major European automakers, were excluded from the subsidies as they do not yet make the vehicles there.
South Korea’s trade ministry said on Tuesday that Hyundai Motor was considering the feasibility of building EVs at its factories in the US to qualify for US federal EV tax credits.