South Korean subsidiary Posco Future M begins shipping domestic-produced battery precursor materials to U.S.-based Ultium Cells
Posco Future M, a South Korean materials company, has made a significant stride in the electric vehicle (EV) industry with its first shipment of Korean-made cathode materials to Ultium Cells, a battery joint venture between LG Energy Solution and General Motors. This move is crucial as it helps meet the local sourcing requirements under the US Inflation Reduction Act (IRA), enabling General Motors’ EVs powered by Ultium Cells to qualify for full or partial US electric vehicle energy tax credits.
The IRA, enacted in August 2022, requires battery materials to be from the US or countries with free trade agreements with the US to qualify for EV tax credits. Posco Future M's supply uses domestic Korean precursors and is shipped to Ultium Cells, a GM-LG Energy joint venture producing batteries in the US, which allows these batteries to count as locally sourced under US policy.
Local production and supply chain localization, including from US allies such as South Korea, are essential for automakers seeking tax credit eligibility for their EVs under the law. The IRA sets strict battery material content rules, and Posco Future M's cathode shipment strengthens GM’s compliance with US green incentives.
This move also helps Korean companies reduce dependence on Chinese materials, which face tariffs and competitiveness issues in the US market due to recent policy changes. The cathode materials produced by Posco Future M meet the IRA regulations and are eligible for Advanced Manufacturing Production Credit (AMPC) incentives, offering up to $45 per kilowatt-hour for battery modules.
Posco Future M has established a fully integrated supply chain spanning from raw materials such as lithium and nickel to precursors and cathode materials. The cathode materials are high-nickel, cobalt, manganese, and aluminum, known for high energy density and output. The company is also intensifying efforts to reduce dependence on China, particularly in the graphite supply chain.
Posco Future M has completed a newly built plant in Gwangyang, South Jeolla Province, with an annual capacity of 45,000 units. The precursors, made from nickel, cobalt, and manganese, were combined with lithium to create the final product. The IRA regulations require battery components to be manufactured within the US or in a US FTA partner country such as Korea.
In addition, Posco Future M is planning to expand production at its Pohang plant in North Gyeongsang Province following the initial shipment. The company is also working on developing natural graphite anode materials by securing graphite ore from non-Chinese sources, such as African countries.
This first shipment of Korean-made cathode materials to Ultium Cells supports US EV tax credit eligibility under the Inflation Reduction Act by localizing cathode supply from a US trade partner, reducing tariff risk, and enhancing the North American EV battery supply chain. This step could potentially boost the competitiveness of Ultium-powered EVs in the US market, given the inflation reduction act's tie of tax credits to the origin of battery materials.
- The supply of cathode materials from Posco Future M to Ultium Cells, a GM-LG Energy joint venture, is significant as it allows batteries produced in the US to be considered locally sourced under US policy, aiding General Motors' EVs in qualifying for full or partial US electric vehicle energy tax credits.
- By reducing dependence on Chinese materials, Posco Future M's cathode materials can help Korean companies avoid tariffs and competitiveness issues in the US market, potentially increasing the competitiveness of Ultium-powered EVs in the US market, given the Inflation Reduction Act's tie of tax credits to the origin of battery materials.
