The electric vehicle supply chain faces new uncertainties as U.S. enforcement actions raise concerns among Korean companies, and LG Energy may delay the launch of its battery factory.

The electric vehicle supply chain faces new uncertainties as U.S. enforcement actions raise concerns among Korean companies, and LG Energy may delay the launch of its battery factory.

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A large-scale U.S. immigration enforcement operation is impacting the U.S. investment plans of major South Korean companies, raising concerns about the future prospects of South Korean investments in the United States.

According to a Global Times report on Monday, U.S. federal law enforcement agencies conducted a raid on a battery joint venture factory between South Korea's Hyundai Motor and LG Energy Solution in Georgia, detaining 475 people, of whom more than 300 are South Korean nationals.

Industry insiders say that this raid is essentially putting pressure on South Korean companies, demanding that they hire more American workers. According to CCTV News, South Korea's Foreign Minister Cho Hyun said on the 6th local time that if necessary he will travel to Washington to directly negotiate with the U.S. federal administration on this matter.

This unexpected incident has already disrupted the production pace of the companies. According to media reports on Monday, LG Energy has tentatively decided to postpone the start of operations at its joint electric vehicle battery plant with Hyundai in Georgia, from the originally planned second half of this year to the first half of next year. Hyundai Motor has also banned all employees from traveling to the U.S. on business trips.

Korean Companies Respond Urgently, LG Energy May Delay Production at Georgia Plant

After the U.S. enforcement action, South Korean companies are scrambling to take measures to control the impact. According to South Korean media reports, LG Energy has tentatively decided to delay the production start of its Georgia battery plant—jointly with Hyundai—from the originally planned second half of this year to the first half of next year. The factory originally aimed for a battery capacity of 30 GWh per year; any delay could affect the electric vehicle production plans of Hyundai and its subsidiary Kia.

In response, an LG Energy spokesperson said Monday that, due to market conditions, the company had already postponed the production start to next year, adding that it is too early to judge whether last week’s event will impact the factory’s operations. Spokespersons for Hyundai Motor and Kia responded to related reports by saying that it is too early to determine any impact on their business.

However, the companies’ vigilance about such risks did not start with this raid. A Samsung Electronics spokesperson said that as early as May this year, the company issued internal guidelines on using short-term ESTA visas for U.S. business trips, informing employees that trips should not exceed two weeks.

Investment Outlook Cast in Shadow

An investor expressed deeper concerns. Kang DaeKwun, chief investment officer at Life Asset Management Inc., said:

"This case shows how difficult it is for Korean companies to make a profit from investments in the United States. Due to inflation, investment returns were already declining, and now companies face difficulties in hiring."

Although the incident has sent shockwaves, the initial reaction from the capital markets has been relatively subdued. Shares of LG Energy and Hyundai Motor only lagged the overall market slightly. LG closed up 0.4%, while Hyundai Motor fell 0.7%. Analysts pointed out that the possible delay at LG Energy had been fully anticipated by the market, while Hyundai Motor is flexible in adjusting EV output and seeking alternative suppliers.

Anna Lee, an analyst at Yuanta Securities, noted in a report that due to the loss of key personnel during installation and trial production, it is now impossible for the factory to achieve mass production by 2026. She expects at least a one-year delay. However, she also stated that since LG Energy had previously warned about possible production delays, the impact on company earnings will be limited.

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