Hyundai and battery supplier SK On are partnering to meet the new battery sourcing requirements of the Inflation Reduction Act (IRA).
The IRA continues the $7,500 federal EV tax credit, but to qualify for the full amount, it stipulates that EVs and their battery packs must be assembled in North America, and certain minerals used in batteries must be sourced either domestically or from countries with a free trade agreement with the U.S.
2023 Hyundai Ioniq 6
Hyundai and SK On have signed a memorandum of understanding for battery supply to Hyundai's U.S. factories after 2025, with further details to be disclosed at a later date, SK On said in a press release. That will help address the domestic assembly portion of the requirements. SK On is new name for the battery business spun off of SK Innovation in October of last year.
For the minerals sourcing component, SK said it recently signed lithium purchase contracts with suppliers in countries that have free trade agreements with the U.S., including Australia and Chile.
This confirms earlier reports that the EV tax credit rules and materials sourcing requirements might accelerate Hyundai's timeline for U.S.-built EVs.
Kia EV manufacturing in Georgia
Hyundai announced its U.S. EV plant—with a corresponding battery venture—earlier this year. The $5.5 billion plant will be located near Savannah, Georgia, and will target a manufacturing capacity of 300,000 vehicles per year. In October, Hyundai confirmed that Kia EVs will also be made at the Georgia "Metaplant." EVs for the automaker's Genesis luxury brand will be made there as well.
SK already supplies batteries for EVs based on Hyundai's E-GMP platform, including the Hyundai Ioniq 5 and Ioniq 6, and the Kia EV6.
The IRA's battery-sourcing requirements have been met with criticism from the auto industry and some members of Congress. A bill seeks the delay of EV tax credit American sourcing rules, but it appears to be stalled.