Hyundai Motor Group is bolstering its electric vehicle (EV) value chain through a long-term supply contract with the world’s second-largest lithium producer. This move underscores reinforced commitment to building a vertically integrated EV production chain, even as global automakers reduce their investment in EVs.
According to industry sources and media outlets, on the 18th, Hyundai Motor and KIA signed a supply contract with Chile’s SQM (Sociedad Quimica y Minera de Chile) for lithium hydroxide. Lithium hydroxide is mainly used in ternary batteries such as NCM (nickel-cobalt-manganese) and NCA (nickel-cobalt-aluminum). The exact supply volume of this contract has not been disclosed.
SQM, a Chilean company, ranks as the second-largest global producer of lithium after Albemarle. Given that Chile, where lithium is primarily produced, has a Free Trade Agreement (FTA) with the United States, minerals sourced from SQM also meet the requirements of the U.S. Inflation Reduction Act (IRA).
This is not the first instance of Hyundai Motor Group actively pursuing key minerals for EV batteries. Back in January, they signed a long-term purchase agreement with China’s lithium producer Ganfeng Lithium for lithium hydroxide, alongside a supply contract with China’s Shengxin Lithium Energy.
Industry observers see Hyundai Motor Group’s efforts to secure the EV value chain as a strategic move aimed at ensuring a stable electric vehicle supply.
Furthermore, Hyundai Motor Group is in the process of establishing a joint battery cell factory with domestic battery companies such as LG Energy Solution and SK On. By securing battery cells and key battery minerals, they have embarked on building a vertically integrated EV value chain.
Research Fellow at Samsung Securities Lim Eun Young commented, “Hyundai Motor and KIA are pursuing vertical integration of the EV value chain,” adding, “Similar to how internal combustion engine vehicles recorded high profitability through vertical integration of the value chain, vertical integration of the value chain is expected to shine in terms of profitability improvement as EV demand recovers.”