Hyundai Motor Group promotes vertical integration in its value chain

Hyundai Motor Group will strengthen its electric vehicle value chain by signing a long-term supply agreement with the world’s second-largest lithium producer.

Hyundai Motor and Kia Corp. have signed a contract with Sociedad Quimica y Minera de Chile (SQM) to purchase lithium hydroxide from the Chilean company, industry sources and foreign media, including Reuters, reported on June 18.

Lithium hydroxide is mainly used in ternary batteries such as NCM (the abbreviation stands for nickel, cobalt and manganese) and nickel-cobalt-aluminum (NCA for short). The exact delivery volume of the deal was kept secret.

SQM is a Chilean company and the second largest lithium producer in the world after Albemarle. The mineral sourced by SQM meets the requirements of the U.S. Inflation Reduction Act (IRA) because it is produced in Chile, which has a Free Trade Agreement (FTA) with the United States.

Such deals are nothing new for the Hyundai Motor Group. In January, the company signed long-term lithium hydroxide purchase agreements with Chinese lithium producer Ganfeng Lithium and Chinese company Shengxin Lithium Energy.

Hyundai Motor Group is building a joint battery cell factory with Korean battery manufacturers such as LG Energy Solution and SK on. Hyundai has begun to vertically integrate its EV value chain by directly securing not only battery cells but also core minerals for batteries.