• Both companies will 50/50 jointly invest in the EV battery plant in Bryan County
  • The two automakers are making efforts to comply to Biden's clean energy tax law
  • Currently, no Hyundai electric vehicles are eligible for the tax credit

South Korea's Hyundai Motor Group and LG Energy Solutions announced plans late Thursday to spend $4.3 billion in building an electric vehicle (EV) battery plant in southeast Georgia, amid efforts to comply with President Joe Biden's clean energy tax law.

The two companies signed a memorandum of understanding during a ceremony at LG's headquarters in Seoul, as per Electrek. Both companies will 50/50 jointly invest in the EV battery plant to be set up in Bryan County, south of Savannah.

"Hyundai Motor Group is focusing on its electrification efforts to secure a leadership position in the global auto industry," Jaehoon Chang, president and chief executive of Hyundai Motor Company, said in a statement.

It will be built adjacent to Hyundai's "Metaplant" manufacturing facility in Georgia. The South Korean automaker in May 2022 announced plans to invest $5.5 billion in the massive EV plant in Ellabell, west of Savannah. According to Garrison Douglas, a spokesperson for Republican Gov. Brian Kemp, the new plant will foster 3,000 jobs as part of the previously estimated 8,100 roles in the state by the end of 2025. The Metaplant facility will produce Hyundai, Genesis and Kia electric vehicles.

The Hyundai/LG plant, on the other hand, is likely to break ground later this year and set to begin battery production toward the end of 2025. It will work toward supplying batteries for 300,000 electric vehicles annually, later to be expanded to 500,000.

"This is exactly what we envisioned when Georgia landed the Hyundai Metaplant in May of last year, and this project is the latest milestone in Georgia's path to becoming the EV capital of the nation," Kemp said in a statement, according to Associated Press.

The announcement comes in view of the ongoing rush of electric vehicle and battery makers across the country, thanks to the U.S. Inflation Reduction Act. Under the IRA, EV makers can qualify for $7,500 tax credit if they assemble the vehicles in North America or a certain percentage of their battery parts and minerals comes from North America or a U.S. free trade partner.

As of now, no Hyundai electric vehicles, along with its Kia and Genesis models, are eligible for the tax credit, as they don't meet the domestic manufacturing requirements.

Besides this, the state of Georgia pledged $1.8 billion in tax breaks and other incentives for an automobile plant in the largest subsidy package offered by a U.S. state, according to the Atlanta Journal-Constitution.

Hyundai, the world's third-largest automaker by vehicle sales, is already assembling electric vehicles at its plant in Montgomery, Alabama. The company also announced it would start assembling its electric Kia EV9 large SUV at the Kia plant in West Point, Georgia.

Last month, Hyundai announced a partnership with SK On--a Korean EV battery developer--to build a huge plant in Cartersville, Bartow County, with a $5 billion investment to create 3,500 jobs.

"Through the joint venture, both parties plan to establish an EV battery cell plant in Bartow County, Georgia, close to the Group's U.S. production facilities, including Hyundai Motor Manufacturing Alabama, Kia Georgia and Hyundai Motor Group Metaplant America," the company said. "The new plant is expected to start manufacturing battery cells in the second half of 2025 with an annual production capacity of 35 GWh, which is sufficient to support the production of 300,000 EVs."

Meanwhile, LG underlined it would be its seventh battery plant in operation or under construction in the U.S. with concentration on efforts to expand EV production in the country.

"Two strong leaders in the auto and battery industries have joined hands, and together we are ready to drive the EV transition in America," LGES CEO Youngsoo Kwon said in a statement.

U.S. President Joe Biden tours the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit
U.S. President Joe Biden tours the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit. This is a representational picture. Reuters