Generous Incentives for Investment
LG Energy Solution, SK On, and Samsung SDI will receive at least 2.1 trillion won in incentives, including tax benefits, for investing a total of about 21 trillion won to build battery plants in North America.
By company, LG Energy Solution is to receive over 1 trillion won in incentives for its investment of about 10 trillion won. The company is constructing a total of six battery plants in North America -- two independent plants in Michigan and Arizona, one joint venture plant with Stellantis in Ontario, and three joint venture plants with GM in Ohio, Tennessee, and Michigan.
LG Energy Solution invested a total of 1.6 trillion won in its Holland, Michigan plant and received an incentive of US$189 million (about 240 billion won) from the state government. In Michigan, GM is investing US$4 billion (about 5 trillion won) in an electric vehicle plant in Orion, and is investing US$2.6 billion (3.4 trillion won) in a joint battery plant with LG Energy Solution. As a result, GM received US$600 million (about 740 billion won) as incentives from the state of Michigan. As Ultium Cells is a joint venture between GM and LG Energy Solution, LG Energy Solution is also receiving a portion of the US$600 million incentives.
SK On is investing a total of 8.1 trillion won in battery plant construction in North America -- 3 trillion won in two plants in Georgia and 5.1 trillion won in Blue Oval SK. The company did not disclose the specific size of the incentives it will receive, but said one factor behind its factory establishment was the incentives proposed by the state government.
SK On is enjoying tax benefits in Georgia, such as property tax cuts and a reduction in rents for land. Georgia has land available for investors and offers space to them at an affordable rate. In particular, the cost of industrial real estate is low in Georgia compared to other metropolitan areas.
Samsung SDI has set up a battery cell module joint venture with Stellantis in Kokomo, Indiana and is currently in talks over incentives with the state government. The two companies will invest US$2.5 billion (about 3 trillion won).
Samsung SDI is currently negotiating various options such as tax reduction and free land use. Stellantis’ parts factory is also located in Kokomo. Experts forecast that Samsung SDI will receive positive results from the incentive negotiations, as Stellantis already has a trusting relationship with the state government.