A South Korean supplier of Tesla Inc. announced on Friday has decided to purchase a vehicle factory from GM’s local unit to begin the contract for the production of electric vehicles.
The deal comes after GM shut down one of its four South Korean factories in late May and fired thousands of employees as part of a global restructuring that resulted in major financial support from Government of South Korea.
GM didn’t reveal the details of the sale of the Gunsan plant, Myongshin, the auto parts maker said it will acquire the land and facility from the GM plant for $113.5 Billion.
Myongshin, also a supplier to Hyundai Motor, is part of a consortium that initially raised 200 Billion to produce 50,000 electric vehicles from 2021 and 150,000 electric vehicles by 2025, according to a statement of a provincial government. The consortium was talking to an unidentified EV manufacturer on the spot, a source with direct knowledge of the problem, adding that it was not Tesla.
The factory could benefit from the free trade agreement between South Korea, the United States, and Europe as well as the electric car supply chain in the country, he said. The electric car factory would generate 900 jobs, another two thousand in suppliers, and the Northern Jeolla provincial government declared.
GM’s South Korean deficit department was once an important industrial base for the company in Asia but was hit hard by the withdrawal of the American manufacturer from Europe, the most significant export market. GM executives also complained about labor costs and disputes.
Moreover, General Motors was also warned by Morgan Stanley to keep its expectations low in contrast to what is expected for autonomous cars project, Cruise. The Wall Street has earlier mentioned in its statement that there is a need to develop driverless car, but there is also an equal requirement of complimentary infrastructure for the smooth transit.