America’s EV Boom Continues With Hyundai and SK On Battery Deal

2023 Hyundai IONIQ 6 at the Auto Show in Los Angeles, Calif. (By Benjamin Yong)

A South Korean battery maker will supply electric vehicle (EV) batteries to Hyundai Motor Group’s manufacturing plants in the United States, as government incentives and the auto industry’s move to electrify its car fleets continue to fuel EV-related investment.

SK On, part of Seoul-based SK Group, and Hyundai announced the partnership on Nov. 30, saying that SK On would begin to provide batteries to the Korean automaker after 2025. Hyundai plans to produce electric vehicles at its assembly and manufacturing plant in Montgomery, Alabama, and at an upcoming $5.5 billion plant near Savannah, Georgia, that broke ground in October.

Hyundai said in April that it would begin EV production in the United States by making the hybrid version of its flagship SUV, the Santa Fe, at its Alabama plant. The company plans to invest $300 million in the expansion project, which is slated to begin cranking out the Santa Fe Hybrid this year.

SK On already has contracts to supply Ford and Volkswagen with batteries from its new $2.6 billion plant in Commerce, Georgia. The company said it expects to hire at least 3,000 workers by 2023 at the massive plant, which is being built in two phases.

Hyundai uses SK On batteries in its IONIQ 5 and IONIQ 6 models. The company noted that Kia Motors, which is part owned by Hyundai, also uses SK On batteries in the Kia EV6. Hyundai will produce Kia vehicles as well as Hyundai and Genesis models at its Savannah facility, which is designed to make up to 300,000 EVs per year.

Automakers and battery companies are ramping up EV battery production in North America at a furious pace. Total lithium-ion manufacturing capacity is projected to rise seven-fold between 2022 and 2030, according to Bloomberg NEF calculations cited by Inside Climate News. Based on company announcements, more than two dozen plants will exist by 2030, most of them currently under construction or planning.

It’s estimated that only 1 percent of the 250 million cars, SUVs, and light-duty trucks in the United States are electric, but demand is growing. EV registrations surged 60 percent in the first quarter of 2022, according to Experian data analyzed by Automative News.

The Inflation Reduction Act, which President Joe Biden signed into law in August, is helping to drive EV battery investment in the United States. The bill provides $369 billion in renewable energy incentives, including a $7,500 federal EV tax credit for cars assembled in North America. The incentive requires that a certain percentage of the battery’s critical materials and components must be sourced domestically or from countries with which the United States has a free trade agreement.