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Tesla supplier buying GM Korea factory for EV contract manufacturing

By Graeme Roberts | 29 March 2019

GMs scaling back of the Chevrolet brand in Europe and other markets was a key reason Gunsan was underutilised and consequently closed

GM's scaling back of the Chevrolet brand in Europe and other markets was a key reason Gunsan was underutilised and consequently closed

A South Korean Tesla supplier will buy a closed car assembly factory from General Motors Korea and start contract manufacturing of electric vehicles, local media reports said.

General Motors closed the Gunsan plant last May as part of a restructuring plan first announced in February which aimed to return its loss-making local subsidiary to profitability. The plant had been hit hard by GM's decision to withdraw Chevrolet from Europe and other global markets over the last few years. Capacity utilisation at the 260,000 unit/year facility, which made the Cruze compact car and the Orlando MPV, fell to around 20% in 2017.

According to Reuters, GM did not disclose the Gunsan sales price but car parts maker Myongshin said it would buy the land and buildings for KRW113bn won (US$99.5m)on 28 June.

The report, citing a statement from a provincial government, said Myongshin, also a Hyundai Motor supplier, is part of a consortium which would initially spend KRW200bn on the factory to produce 50,000 EVs starting in 2021 and 150,000 in 2025.

"We aim to close this deal as soon as possible to ensure that there will be ongoing economic activity," GM Korea said in a statement.

A Reuters source said the consortium was in talks with an unidentified global automaker to manufacture electric vehicles at the facility and added it was not Tesla.

The source added the plant could take advantage of South Korea's free trade deals with the US and Europe plus South Korea's electric car supply chain [it is a major source of batteries].

The electric car factory would create 900 jobs and another 2,000 at suppliers and other companies, the North Jeolla Province government statement cited by Reuters said.