Tesla supplier agrees to purchase GM’s South Korean plant

by SpeedLux
general motors

A South Korean supplier of Tesla Inc stated on Friday it had agreed to purchase a shuttered auto factory from General Motors’ local unit to start contract manufacturing of electric vehicles.

The deal comes after GM shut down one of its four South Korean plants in late May and let go thousands of employees, as part of a worldwide restructuring drive which culminated in a significant financial support package from the South Korean government.

GM did not reveal the sales price of the Gunsan factory, but auto parts maker Myongshin stated it would buy the land and buildings of the GM facility for 113 billion won ($99.9 million) on June 28.

Myongshin, also a Hyundai supplier, is part of a consortium that would initially invest a total of 200 billion won on the factory to produce 50,000 EVs starting 2021 and 150,000 EVs in 2025, according to a statement from a provincial government.

“We aim to close this deal as soon as possible to ensure that there will be ongoing economic activity,” GM Korea stated.

The consortium was in talks with an unidentified international automaker to manufacture electric vehicles at the facility, a source with direct understanding of the matter previously informed Reuters, adding that it was not Tesla.

The plant could take advantage of South Korea’s free trade deal with the United States and Europe, and the nation’s electric car supply chain, he stated.

The electric car factory would generate 900 jobs and another 2,000 at suppliers and other companies, the North Jeolla Province government stated.

GM’s loss-making South Korean operation used to be a major manufacturing base for the company in Asia however it has been hit hard by the U.S. automaker’s departure from Europe, a major export market. GM executives have also complained about labor expenses and disputes.

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