Byton contracts manufacturing in South Korea
The automotive parts manufacturer MS Autotech has just become a contract manufacturer for Byton in South Korea. Through its subsidiary Myoungshin, MS Autotech will produce more than 50,000 electric cars annually – in a former General Motors factory.
After the first reports about a possible deal between MS Autotech and Byton circulated in April this year, Byton has now confirmed that it has signed a deal with the Autotech subsidiary Myoungshin. Byton, which was founded in 2017 by Chinese automotive company FMC (Future Mobility Corp), said the deal with Myoungshin which would involve “sales, production and investment”. Reuters reports that in South Korea, a Jeonbuk provincial government official has also confirmed that Myoungshin will produce Byton’s electric SUV M-Byte at the former General Motors factory in the city of Gunsan from 2021. This means Byton is moving very fast since the Chinese startup only revealed the production version of the M byte at the IAA this month.
Myoungshin only recently bought GM’s production facility in June for 113 billion won (around 86 million euros). The Americans had closed the plant in May 2018 due to low capacity utilisation and the enormous pressure on the Group to cut costs. While the plant should initially build 50,000 electric cars per year, the first reports also said that this figure could rise to 150,000 units per year by 2025.
The e-cars rolling off the assembly line in Gunsan are to be sold in South Korea and overseas. Reuters concluded that Chinese company Byton could benefit from the South Koreans’ free trade agreement with the United States and Europe by awarding contracts to Korea. Needless to say, Korea’s firmly established electric car supply chain would also no doubt be advantageous to Byton. On the purely fiscal level, Byton’s manufacturing in South Korea would also be an opportunity to escape the tariffs being imposed on made-in-China vehicles exported to the United States. A prudent move, since it still remains unclear how the trade conflict between China and the USA will continue.
Myoungshin’s parent company MS Autotech is a supplier with close ties to Hyundai. The company is also getting more experience with the US market since the company has also been supplying parts to Tesla. Now it looks as if the company is significantly expanding its core business and fostering proximity to Chinese manufacturers. This tendency has been palpable in the Korean automotive industry for some time now – Six months ago, SNK Motors announced that it would cooperate with China’s Songuo Motors to build an electric car plant with a capacity of 100,000 vehicles per year. And in 2018 Nanos signed an agreement with China’s Chery Automotive with the goal of building electric cars by 2021. Both projects are also planned in the Gunsan region.
Byton’s deal with Myoungshin in South Korea is particularly opportune at a time when Made-in-China vehicles exported to the United States are currently subject to tariffs, and sales of cars made in South Korea can avoid those tariffs. The plant could allow the Chinese parent company FMC to take advantage of South Korea’s free trade deal with the United States and Europe, as well as the country’s electric car supply chain. FMC plans to launch the vehicles in the United States and Europe soon after starting sales in China in 2019.