Hyundai set to break ground on $5.5bn EV 'metaplant' in the US this month

The South Korean company plans to begin commercial production in the first half of 2025, with an annual capacity of 300,000 units

Hyundai will break ground this month on a $5.5 billion electric vehicle and battery plant in Georgia, US. AP

South Korea's Hyundai Motor said on Friday it will break ground this month on a $5.5 billion electric vehicle and battery plant in the US.

Hyundai plans to begin commercial production in the first half of 2025, with an annual capacity of 300,000 units.

The October 25 groundbreaking for the Hyundai Group "metaplant" in Savannah, Georgia, is part of the Hyundai Group’s "commitment of $10bn by 2025 to foster future mobility in the US, including production of EVs," the company said.

The groundbreaking comes amid anger from Korea and the EU over US electric vehicle tax policy.

The Inflation Reduction Act, signed by President Joe Biden in August, requires EVs assembled in North America to qualify for tax credits in the United States, but excluded Hyundai and its affiliate Kia from EV subsidies, as they do not yet make the vehicles there, along with major European automakers.

The law made about 70 per cent of EVs immediately ineligible for the tax credits of up to $7,500 per vehicle.

Mr Biden has expressed willingness to continue talks with South Korea over recent US legislation that denies subsidies to most foreign makers of electric vehicles, South Korea said earlier this month.

He has also repeatedly praised investments by major foreign automakers to build electric vehicles and battery plants in the US, including an announcement on Tuesday by Honda Motor and LG Energy that they would locate a $4.4bn battery plant in Ohio.

Mr Biden gave the assurance in a letter to South Korean President Yoon Suk-yeol, who had asked the US president last month for help to allay Seoul's concerns that the new US rules would hurt South Korea's automakers, Reuters reported.

As a result of the August law, only about 20 EVs qualify for subsidies under the new rules, among them models from Ford Motor and BMW.