Hyundai MOBIS and LG Chem Conclude contract to establish joint venture for development of battery packs for environment-frien

Hyundai MOBIS 2009/11/04

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- Joint venture will be officially launched early next year … Equity ratio between Hyundai
MOBIS and LG Chem is 51:49

- Synergy effects generated between LG Chem's electric cell technologies and Hyundai MOBIS' car electronics technologies … Investments worth 40 billion won to be made by 2013

- Plant with annual production capacity of 200 thousand units to be built on site within core HEV parts plant of MOBIS in Uiwang

- Korean government's Low Carbon, Green Growth project expected to gain momentum from cooperation between two leading companies in Korea

Hyundai MOBIS (www.mobis.co.kr) will join hands with LG Chem (www.lgchem.co.kr) to establish a joint venture company that will be in charge of research and development as well as production of battery packs applied to environment-friendly vehicles. Hyundai MOBIS and LG Chem are domestic leaders in their respective fields, offering global top-notch technologies. It is anticipated that the joining of hands between the two top players will enhance national competitiveness in core future-oriented, environment-friendly vehicle technologies.

On November 2, Hyundai MOBIS announced at the JW Marriott Hotel that it concluded a contract with LG Chem to establish a joint venture that would handle research, development, production, and sales of lithium-ion battery packs for environment-friendly vehicles. The joint venture will be officially launched early next year, and will fully commence mass production of relevant products in the second half of next year after going through a pilot production process.

The joint venture will receive battery cells from LG Chem, use them to produce battery packs for Hyundai and Kia Motors' vehicles, and supply the battery packs to Hyundai MOBIS. The equity ratio between Hyundai MOBIS and LG Chem is 51:49. The board of directors will consist of a total of six directors, with each company appointing the same number of directors. It is said that one of the directors named by Hyundai MOBIS will serve as the CEO.

The two companies agreed to secure a site within Uiwang Plant in Gyeonggi Province, where Hyundai MOBIS' core hybrid vehicle parts plant is located, and build a plant with an annual production capacity of 200 thousand units. To this end, the two companies will make investments totaling around 40 billion won by 2013.

Batteries for environment-friendly vehicles are a commonly used technology that can be applied to hybrid, fuel cell, and electric vehicles. It is a core technology that has a direct influence on an environment-friendly car's performance, such as its fuel efficiency and mileage. In particular, the lithium-ion battery is known to have an energy efficiency level that is at least 50% higher than that of the nickel-metal hydride battery. This is why many forecasts are being made that the lithium-ion battery will be a leading battery for environment-friendly vehicles.

The joint venture is expected to generate synergy effects by effectively combining the technologies of LG Chem, which boasts the world's top-notch technologies in the lithium-ion battery sector, and the technologies of Hyundai MOBIS, which has world-leading design and manufacturing technologies in the field of core automotive parts and car electronics. It is anticipated that the joint venture will supply globally competitive battery packs, and enjoy a leadership position in the environment-friendly vehicle market.

The joint venture will likely place focus on securing competitiveness in battery packs, which are garnering great attention when it comes to futuristic, environment-friendly vehicles. Hyundai Motor and Kia Motors will have a stable supply source of highly competitive battery packs for environment-friendly vehicles. The joint venture will also give momentum to development of environment-friendly vehicles which is a key element of the Low Carbon, Green Growth project that the Korean government is implementing.

Hyundai MOBIS Vice Chairman Kim Dong-jin explains, "We are planning to generate synergy effects by focusing investments on improving manufacturing technologies and developing design technologies for battery packs, in addition to providing active support in terms of automobile-related technologies and facilities."

LG Chem Vice Chairman Kiim Bahn-suk says, "Establishment of the joint venture means securing a long-term and stable source of cell supply. Based on the two companies' co-development activities, the joint venture will make substantial contributions in taking a global lead in the environment-friendly vehicle market."

Experts expect the global electric vehicle market to sharply grow from 740 thousand vehicles this year to 12.93 million vehicles by 2019. Global finished car companies, including Toyota, GM, Volkswagen, and Honda, are strengthening cooperation with battery companies in the form of a joint venture and co-development. They are focusing their competencies on strengthening the competitiveness of batteries for environment-friendly vehicles and building a stable procurement structure. The Hyundai-Kia Group is also establishing a joint venture with LG Chem through Hyundai MOBIS, thereby laying the foundation to take a leading position in the environment-friendly vehicle market.