Hyundai Motor Company, alongside its affiliate Kia Corp., has commenced construction of a new electric vehicle (EV) factory in South Korea. With an investment of $1.5 billion (2 trillion won), the factory, located in Ulsan, is set to be completed in 2025 and aims for an annual production capacity of 200,000 EVs starting from the first quarter of 2026. This project marks Hyundai’s first new domestic plant in 29 years.
Hyundai plans to adapt its investment strategies in line with the evolving EV market, aiming to sell 2 million EVs by 2030. The company intends to introduce a flexible production system in the new plant, incorporating robotics, AI and smart logistics to enhance productivity and quality.
Why It Matters
Hyundai Motor’s decision to construct a new $1.5 billion EV factory in South Korea comes as South Korea retains its top spot in eco-friendly vehicle exports to the U.S., despite challenges posed by the U.S. Inflation Reduction Act. Further, South Korea’s environment ministry announced a plan in September to expand subsidies for the purchase of electric cars to promote domestic demand.
However, Hyundai’s expansion plan faces potential supply chain vulnerabilities, particularly in the context of the refined graphite market, crucial for lithium-ion batteries. With China, accounting for about 90% of the world’s refined graphite production, exerting tighter export controls, South Korea’s major automakers could face supply challenges. Further, South Korean battery makers are putting the brakes on their plans to build manufacturing facilities overseas. This global market shift could impact Hyundai’s long-term operations as other South Korean battery makers scale back their overseas expansion plans.
Hyundai Motor Company, alongside its affiliate Kia Corp., has commenced construction of a new electric vehicle (EV) factory in South Korea. With an investment of $1.5 billion (2 trillion won), the factory, located in Ulsan, is set to be completed in 2025 and aims for an annual production capacity of 200,000 EVs starting from the first quarter of 2026. This project marks Hyundai’s first new domestic plant in 29 years.
Hyundai plans to adapt its investment strategies in line with the evolving EV market, aiming to sell 2 million EVs by 2030. The company intends to introduce a flexible production system in the new plant, incorporating robotics, AI and smart logistics to enhance productivity and quality.
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