South Korean automobile manufacturer Hyundai has announced that by 2025, it plans to invest $7.4 billion in the US to manufacture electric vehicles (EV), upgrade production facilities, and expand its investment in smart mobility solutions.
Hyundai’s announcement comes as US President Mr. Joe Biden’s administration prioritizes a push towards electric cars, replacing 650,000 federal fleet vehicles with US-made EVs.
Mr. Biden also signed an executive order in January aimed at enforcing stricter regulations on government procurement practices to boost purchases of American-made goods, improve domestic production, and open up new markets for new technologies.
According to analysts, Hyundai’s US investment is essential to take advantage of the Mr. Biden administration’s EV policies, including subsidies and tax incentives.
Mr. Kevin Yoo, an analyst at eBEST Investment and Securities remarked that “if Hyundai seeks to fully leverage US EV policies, they need to pursue not only EV production but also source major auto parts in the US.”
Mr. Yoo said that it is up to how the South Korean carmaker sources US-made batteries for its US EV production, increasing the potential of further investment in the US by top battery makers.
Mr. Biden has proposed a $174 billion investment in EV and charging infrastructure. Hyundai will begin producing EV in the US in 2022, and while its affiliate Kia plans to manufacture EV in the US as well. Hyundai manufactures cars in Alabama, while Kia produces cars in Georgia.
Hyundai said in a statement that “we are reviewing options including expanding on our production facility after we’ve taken a closer look at US market conditions and the US government’s new EV policy.”
The move comes as SK Innovation, Hyundai’s main electric battery supplier, steps forward with the development of new US factories for Volkswagen and Ford, as well as plans to increase capacity in the US.
SK Group Chairman Mr. Chey Tae-won stated that the company might invest up to $5 billion in the battery business in the US, implying that there is potential for SK to invest more in the country.
Analysts added that Hyundai will spend the most on EV Capex, with spending for collaboration with other US firms becoming more flexible depending on how the US EV market changes.
Hyundai said that it will collaborate with the US government and business partners to build hydrogen refueling stations and sell its NEXO hydrogen SUVs.
According to Hyundai, the company is also investing in robotics, urban air mobility, and self-driving technology.
