(Bloomberg) -- Hyundai Motor Group selected SK On Co. to supply batteries for electric vehicles it makes in North America, reducing its reliance on Chinese suppliers to meet US climate tax law.

The group, which controls Hyundai Motor Co., Kia and Genesis, signed a memorandum of understanding with the Seoul-based battery maker Tuesday, according to statements from the two companies. SK will provide batteries to Hyundai’s EV plants in US after 2025, they said. 

The US Inflation Reduction Act pushes EV makers to produce vehicles in North America and secure key minerals for batteries outside China. SK said it has signed lithium deals in Australia and Chile, which have free trade agreements with the US.

“The latest MOU can help both sides to meet the IRA requirements in EV production starting from mineral extraction, processing and to vehicle assembly,” SK On said. 

SK, the world’s fifth-biggest EV battery maker, has two manufacturing plants in Georgia. The company’s batteries are used in Hyundai’s Ioniq 5 and 6 EVs, as well as Kia’s EV6 SUV. 

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