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Tesla’s Musk Sees South Korea as a Top Investment Candidate

(Bloomberg) -- Tesla Inc. Chief Executive Officer Elon Musk said he considers South Korea as a top candidate for investment, according to the office of President Yoon Suk Yeol.

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The billionaire’s remarks came out of a virtual meeting Musk had with Yoon, according to Yoon’s office. Musk said he would make any investment decision after a comprehensive review of investment conditions, including around manpower and technology.

Yoon also listened to Musk’s plan to construct another gigafactory in Asia to make electric cars. Tesla’s main factory in Asia is in Shanghai in China -- a facility that recently doubled production capacity to about 1 million vehicles a year.

Musk also expressed willingness to actively invest in EV charging infrastructure in South Korea, according to Yoon’s office, and significantly expand supply chain cooperation with Korean companies. Yoon’s office said Musk expects parts purchases from Korean firms to grow to at least $10 billion by 2023.

Tesla representatives didn’t immediately respond to an email seeking comment.

Tesla already buys many South Korean-made automotive parts, including from LG Energy Solution Ltd., a long-time battery supplier. Indeed Jeon Hyeyoung, an analyst at Daol Investment & Securities Co. in Seoul, said last month that LG Energy’s outlook is positive in part because of increased production at Tesla’s Shanghai plant.

LG Energy said in June that it would spend $452 million building a new line for 4680 batteries, the next-generation cells touted by Tesla as key to unlocking cheaper, and thereby more widespread, electric vehicles.

Korea is also home to two of the world’s biggest automakers, Hyundai Motor Co. and Kia Corp., as well as other battery makers such as SK On Co. and Samsung SDI Co. The Asian nation sees electric vehicles, rechargeable batteries and semiconductors as key growth drivers of its economy and considers its high-tech supply networks with the US essential.

Ties between Korea and the US came under strain in August when the Biden administration signed its Inflation Reduction Act, which rules out tax breaks for electric vehicles assembled abroad.

Outside of China, where Tesla has a large presence, South Korea isn’t the first country in the region to woo Musk.

Indonesia President Joko Widodo in August said he wants Tesla to make electric cars in the nation, and not just batteries, and is willing to take the time needed to convince Musk to see the country as more than just a rich repository of resources.

According to Choi Sang-mok, South Korea’s senior presidential secretary for economic affairs, the meeting on Wednesday happened at 10am local time after Yoon and Musk were scheduled to meet in person at the B20 Summit in Bali, Indonesia, but that tie-up got canceled.

Yoon explained Korea’s world-class automotive industry ecosystem and investment conditions, and asked for a positive review of Korea as a candidate for another gigafactory, Choi told reporters in Seoul.

Yoon also told Musk that South Korea’s government would actively improve regulations that may cause difficulties for foreign investors doing business in Korea, according to Choi.

--With assistance from Heejin Kim, Sohee Kim, Chunying Zhang and Shinhye Kang.

(Updates with further detail on meeting in final paragraphs.)

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