South Korea will offer "active support" if Tesla builds gigafactory there

Peng Chen, DIGITIMES Asia, Taipei 0

South Korean president Yoon Suk Yeol visited the US. Credit: AFP

South Korean president Yoon Suk Yeol met with Elon Musk on April 26, asking the Tesla CEO to build a gigafactory in the country. Yoon said South Korea will provide support for location and taxes if the EV company makes the investment.

Yoon was on a state visit to the US and met with Musk at the latter's invitation, according to South Korea's senior presidential secretary for economic affairs Choi Sang-mok.

South Korea-based Yonhap reported that Yoon said the country is ideal for operating a gigafactory due to its world-class manufacturing robots and advanced labor force. He also said the government will offer active support in terms of location, workforce, and taxes should Tesla decide to invest.

According to Choi, Musk said he expects to visit South Korea, which remains an interesting and leading candidate to host Tesla's plant.

Choi said Yoon added that greater cooperation between South Korean businesses and Musk's SpaceX is desired as it would facilitate the country's space industry development.

Yoon has been trying to lure Tesla's investment to South Korea. According to Reuters, Yoon had a video call with Musk in November 2022. The president said afterward that the government would provide tailored incentives and reduce risks from unions to attract Tesla's interest.

Tesla has announced a new gigafactory in Mexico. Reuters reported that Canada and Indonesia have also been considered for the EV maker's next production base.

South Korea is on track to scale up its EV and battery industry globally. In early April, the government released a series of strategies to help local battery companies gain a presence, especially in the US.

One of the measures was offering KRW7 trillion (US$5.32 billion) worth of loans and guarantees over the next five years for battery and material companies to invest in facilities on North American soil.

Japan is also expected to see more battery investment. Nikkei Asia reported that Honda Motor and battery manufacturer GS Yuasa will invest more than JPY400 billion (US$2.99 billion) in a domestic lithium-ion battery plant, with a subsidy of JPY150 billion from Japan's Ministry of Economy, Trade and Industry.

The project will target 20GWh of annual capacity, according to Nikkei Asia. The news came after Honda said on April 26 that it will collaborate with GS Yuasa to develop high-capacity and high-output lithium batteries for EVs.