General

According to Huacheng Import and Export Data Observation, South Korea's Samsung Vision (SDI) recently announced that it will invest $3 billion to establish a joint venture electric vehicle factory with General Motors in the United States. The factory is scheduled to start production in 2026 and is expected to have an annual production capacity of 30 gigawatt hours. The company stated that the location of the planned joint venture factory has not been determined yet.

On May 26, Hyundai Motor Group, another major multinational enterprise in South Korea, announced that it had established an electric vehicle battery manufacturing joint venture with Korean LG Energy Solution (LGES) in the United States, with a total investment of more than 4.3 billion dollars. The two companies will respectively take 50% of the shares. In addition, the battery production of the joint venture is planned to start at the end of 2025, with an annual output of 3 billion watt hours, which can support the production of 300000 electric vehicles. In addition, LG New Energy is in negotiations with Toyota regarding the supply of batteries in the United States. At present, the top 20 chaebols in South Korea have basically announced investment plans for the United States, as reported by Huacheng Import and Export Data Observation.

After the release of the US Inflation Reduction Act and the Chip and Science Act last year, the manufacturing industry in South Korea has significantly accelerated its investment in the United States. The Inflation Reduction Act announced that it will provide up to $369 billion in subsidies to support the production and investment of electric vehicles, critical minerals, clean energy, and power generation facilities, with up to 9 tax incentives based on production and sales in the United States or North America as prerequisites. In particular, the US government will provide tax credits to consumers who purchase electric vehicles, but obtaining full subsidies must meet conditions such as assembly of the entire vehicle in North America, a certain proportion of key minerals coming from the United States, and regions that have signed free trade agreements. In order to spare no effort to "attract" investment, the Inflation Reduction Act also requires that a certain proportion of electric vehicle battery components must be manufactured or assembled in North America to receive tax subsidies. This proportion will be 50% in 2023, increasing to 60% in 2024 and 2025, and increasing by 10% annually thereafter, reaching 100% by 2029. Moreover, at the end of March, the US Treasury Department issued guidance on battery procurement requirements for electric vehicle tax credits, clarifying the details of the subsidy policy for electric vehicles in its Inflation Reduction Act. The Inflation Reduction Act is seen as the "White List of Power Batteries" in the United States, making guidance a guiding tool for leading companies in other countries' industrial chains to explore the US market. For example, LG New Energy utilizes subsidies under the Inflation Reduction Act and the trend of hot sales of electric vehicles in the United States. Its financial report shows that the company's operating profit increased by more than double in the first quarter, as reported by Huacheng Import and Export Data Observation.

After fully utilizing various favorable conditions in the United States and achieving a surge in profits in the US market, it will further attract Korean companies to explore the US market. Recently, South Korean President Yoon Suk Yeol announced that he would invest an additional 45 billion dollars in the United States. This investment will come from Samsung, SK Company and Hyundai Motor Company Motor in South Korea. Among them, Samsung Semiconductor Dezhou Plant will invest an additional $25 billion, Hyundai Motor Company Motor and SK Company will invest $11.4 billion and $5.4 billion respectively. In addition, South Korea will also establish a photovoltaic factory in Georgia, USA, with an estimated investment amount of 3.2 billion US dollars. The total investment amount above is as high as 45 billion US dollars, as reported by Huacheng Import and Export Data Observation.

Since last year, many adverse factors have plagued the Korean economy, especially the Trading nation, which has led South Korea to pay more attention to the market consumption of export objects. The World Economic Outlook Report released by the International Monetary Fund (IMF) on April 11 lowered the South Korean economic growth forecast by 0.2 percentage points to 1.5% in 2023. This is also the fourth consecutive time since July last year that the IMF has lowered its economic growth forecast for South Korea. For many years, South Korea's trade surplus with China has been in deficit since the beginning of this year (South Korea's trade deficit with China in the first quarter of this year was nearly 8 billion US dollars), and South Korean companies will take a more aggressive step in expanding into the US market. Huacheng Import and Export Data Observation Report.