SEOUL -- South Korea's Hyundai Motor Group will build its first overseas fuel cell factory in China, taking advantage of government backing for autos that run on hydrogen.
Work starts next month on the plant in a special development district of Guangzhou. Operations will begin after completion in the second half of 2022, with capacity starting out at 6,500 fuel cell systems a year, Hyundai said Friday.
The Chinese government is promoting hydrogen-powered commercial vehicles, and Hyundai sees a chance to supply local companies.
Hyundai said in a statement it will "gradually increase the capacity in line with market demand."
Construction of the factory is expected to make use of subsidies from the Guangdong Province government. Hyundai did not say how much it would invest in the project.
Hyundai makes fuel cell systems for its own vehicles in Ulsan, South Korea, with an annual capacity of about 25,000 units. The new Chinese facility will lift overall capacity by roughly 30%, with deliveries to go to automakers as well as industrial machinery manufacturers.
Hyundai will draw on manufacturing know-how acquired from its Nexo fuel cell sport utility vehicle to mass-produce the systems for sale to other automakers.
In December, Hyundai launched the HTWO (pronounced "H2") fuel cell system brand, with plans to sell 700,000 units by 2030. The South Korean group says it will invest 4.1 trillion won ($3.7 billion) through 2025 in the hydrogen business.