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| The front gate of the GM Korea plant in Gunsan, North Jeolla Province. / Yonhap |
China's Byton, foreign EVs set to be assembled in contract manufacturing
By Nam Hyun-woo
Domestic auto parts suppliers will buy a closed GM Korea plant in Gunsan, North Jeolla Province, to assemble electric vehicles (EVs) for foreign brands, including China's Byton, according to industry officials Sunday.
According to MS Autotech, a Hyundai Motor first-tier supplier, it will buy the plant from GM Korea for 113 billion won ($99.3 million) to run a contract manufacturing business for EVs. The deal will be closed June 29.
MS Autotech's subsidiary Myoungshin will pay for the plant first, and members of a consortium led by MS Autotech will then repay it.
Reportedly, six firms have joined the consortium, including Sejong Industrial, a domestic automobile exhaust system maker, and Future Mobility, a Chinese startup running EV brand Byton.
The consortium will pour an additional 300 billion won into the plant and make 50,000 EVs in 2021. It plans to increase this to 150,000 by 2025.
Though the firm said in a recent interview with a local newspaper that it is yet to conclude any contracts from automakers, industry analysts said the plant's portfolio will likely include Byton, given its participation in the consortium.
MS Autotech has been supplying door, floor and frame parts to Hyundai Motor since its establishment in 1982. Since last year, the firm has been supplying parts to U.S. EV maker Tesla.
Industry analysts said MS Autotech's move reflects the automobile industry trend of outsourcing the manufacturing process.
"The deal seems to be a win-win for every involved party _ Chinese and other EV brands, MS Autotech and even Hyundai Motor," said Kim Phil-soo, a professor at Daelim University's Automotive Engineering Department.
"MS Autotech chose the fine location of Gunsan, where carmakers' plants are making an industrial cluster. For Chinese and other EV brands, they can use the plant as a gateway for their exports, using Korea's well-established free trade agreements with major nations and the country's reputation for making quality products."
Before MS Autotech, several Korean automobile and tech firms have teamed up with Chinese counterparts to build EV plants in Gunsan and the nearby area.
Last month, Korea's SNK Motors announced it had partnered with China's Songuo Motors to build an EV plant capable of producing 100,000 vehicles a year in the region. Last year, Korean optical firm Nanos joined with China's Chery Automotive to build EVs in the region from 2021.
"Along with other brands, MS Autotech will likely attempt to win EV contracts from Hyundai Motor," Kim said. "With Hyundai Motor and other carmakers suffering from high personnel expenses, MS Autotech's plan of becoming a contract manufacturer could be an attractive option for carmakers."
General Motors shut GM Korea's Gunsan plant in May last year due to low utilization and the need to reduce outlays. GM holds a 77 percent stake in GM Korea, with the state-run Korea Development Bank and SAIC Motor Corp. controlling 17 percent and 6 percent, respectively.
