Hyundai, Kia to adopt in-house LFP batteries for cheaper EVs in time for Tesla Model 2 — likely to qualify for US tax incentives according to leak ^↺

While electric cars like the Hyundai Ioniq 5, Kia Niro, and Hyundai Kona are rather attractive prospects for small, practical EVs, they are still unaffordable for many potential buyers. If a recent insider report from The Korea Herald is to be believed, the Hyundai Motor Group aims to tackle the EV cost issue by developing its own in-house lithium iron phosphate batteries.

The report indicates that the Hyundai Motor Group will complete development of its in-house LFP batteries by 2025. The new, more affordable batteries would help cut manufacturing costs for affordable and mid-range vehicles from both Hyundai and Kia.

This implies that existing models, like the Hyundai Kona EV, Kia Niro EV, and perhaps even the Hyundai Ioniq 5, would see some substantial price cuts in the coming years.

The Hyundai Motor Group didn't comment directly on the claims, stating that it is pursuing partnerships with a number of Korean battery makers. Although, Hyundai had reportedly previously confirmed that it was investing heavily in battery development, indicating that it would be working on NCM, LFP, and solid-state batteries alongside battery companies.

We are looking into working with small battery makers as well as large companies (like LG Energy Solution, Samsung SDI and SK On) here in Korea. - Hyundai Motor Group spokesperson, via The Korea Herald

Kia also looks to be planning at least two more affordable EVs in the coming years. The EV3 has already materialised as a compact crossover concept that's expected to make it to production by 2024 at a price of around US$35,000. The EV2, on the other hand, has been confirmed by the Korean marque as a 2025 electric compact hatchback, and rumours indicate a US$30,000 price tag to go along with it.

This pricing strategy appears to take into account Kia's current supply chain, which relies on batteries from CAT, LG Energy, and SK Solutions. The Hyundai Motor Group may be able to slash the prices on upcoming affordable models by developing its own in-house solution, but it's unclear how effective that would be, especially considering Tesla's upcoming Model 2.

Tesla is expected to unveil the much-awaited Model 2, which is also expected to target affordability and practicality above anything else, in 2025. Leaks and rumours pitch the Tesla Model 2 to land at a price of around US$25,000.

It's not guaranteed that the US EV tax incentives will be the same as they currently are by 2025, but it appears possible that a Korea-developed LFP battery may make upcoming Hyundai Motor Group EVs eligible for up to US$7,500 in tax incentives, making them far more attractive for those considering a Tesla or other US-made EV.

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