POSCO Int'l to set up production facility in Mexico to expand car parts biz

POSCO SPS Pohang plant / Courtesy of POSCO International

By Kim Hyun-bin

POSCO International plans to establish a driving motor core production corporation in Mexico and expand its eco-friendly vehicle component business.

The company said Tuesday its board of directors decided to invest in the establishment of a production facility in Mexico to localize the production of driving motor cores in North America. POSCO International will hold an 80-percent stake, while POSCO SPS, a wholly-owned subsidiary, will own 20 percent.

POSCO International selected driving motor core production as its strategic business and plans to make continuous investments. Driving motor cores are key components of an electric vehicle's powertrain that converts electrical energy into mechanical energy. The company aims to attain a global market share of 20 percent by 2025 with the capability of producing 4 million units of driving motor cores, which includes 2 million units in Korea, 900,000 units in China, 650,000 units in North America, and 450,000 units in Europe.

The board of directors at POSCO International approved 52 billion won for the initial investment, but plans to allocate 162 billion won by 2030 into the Mexican production facility. Construction will start in June of next year, while production is scheduled to begin in the second half of 2023. The initial production scale is planned at 300,000 units, but will increase gradually to 1.5 million units by 2030.

"We decided to make this investment to target North America, the largest market for electric vehicles, and to strategically prepare for the US government's eco-friendly mobility policy," POSCO International said.

The U.S. announced a goal of replacing 50 percent of new cars sold in the country with EVs by 2030. The parts market is also growing rapidly due to the plans by three American automakers General Motors (GM), Ford and Stellantis to expand their EV lineups.

POSCO International selected Mexico as its production base for targeting North America, because of U.S. import restrictions on electric steel sheet, a material used to make motor cores, and the geographic advantages of the Latin American country. POSCO International's motor core plant is scheduled to be built in Ramos Arizpe, Coahuila, Mexico, where many global automakers and parts makers are located.

"We will use our Mexican production subsidiary as a core outpost for the production of EV components. By combining our years of overseas investment experience, the technological competitiveness and POSCO's material capabilities, we will play a key role in realizing the group's carbon neutrality goal," a POSCO International official said.