Kia To Tap Into US Subsidies By Expanding Mexico Plant To Make EVs

Kia confirmed it is considering transferring some of its production lines for EVs to its factory in the state of Nuevo Leon.

Kia Concept EV5 rear view

Dan Mihalascu

By: Dan Mihalascu

May 18, 2023 at 4:26am ET

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Kia Motors is in talks to expand its production plant in northern Mexico to build EVs in an effort to qualify for US federal tax credits for electric vehicles.

The plans have been confirmed by company officials after the governor of Mexico's Nuevo Leon state, Samuel Garcia, made a surprise announcement on Twitter on May 16.

"Nuevo Leon is being strengthened as a electro-mobility hub: Kia once again bets on Nuevo Leon with an investment to expand its plant and produce two Kia car models," he tweeted while on a trip to Seoul for a business forum during which he is believed to have met with Kia officials.

While he didn't reveal what models would be built at the expanded site, his tweet was accompanied by photos of the Kia EV9 three-row large electric SUV. Kia has already confirmed that the EV9 will be made from 2024 at its plant in West Point Georgia, United States.

A Kia official confirmed to The Korea Herald that the company is considering an investment in Nuevo Leon.

"We are not building a new plant but (we are) considering transferring some of the production lines for EVs. The move is part of our response to the Inflation Reduction Act in the US. But the exact schedule has not yet been decided."

While the Nuevo Leon governor said the investment size for the Kia plant could reach $1 billion, the Kia representative declined to confirm the amount.

The northern border state of Nuevo Leon is home to a Kia assembly plant in the town of Pesqueria that occupies an 827-acre site. Completed in 2016, the plant has an annual production capacity of 400,000 vehicles per year. It currently makes Kia's K3 and Pride compact sedans.

Foreign companies have been ramping up investments in the state located on the US-Mexico border hoping to take advantage of the Inflation Reduction Act that offers significant tax cuts for North American-made EVs and components.

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In February, Tesla also announced plans to build a $5 billion factory in the state, which is considered to be an industrial capital of Mexico. Nuevo Leon is home to approximately 2,600 companies, including 270 Korean firms, that employ 600,000 workers.

While Mexico's domestic EV market is relatively modest, it is growing fast as it benefits directly from free trade agreements with the US and other subsidiary programs.

Gallery: Kia Concept EV5

Kia Concept EV5