Hyundai Mobis Co., car parts making unit under South Korea’s Hyundai Motor Group, has clinched a large-scale overseas deal worth billions of dollars to supply a key electric vehicle component to German auto giant Volkswagen AG.

Hyundai Mobis announced Wednesday that it signed a contract with Volkswagen to supply battery system assembly (BSA), a key component of electric vehicles (EVs).

The company did not disclose further details about the size of the order but it is known to be several trillions of won.

BSA refers to a complete product that combines a battery pack with the battery management system and other parts so that the battery can operate safely and efficiently in an EV.

High-capacity and high-efficiency battery systems play a key role in determining the quality and performance of EVs.

Hyundai Mobis has an extensive portfolio of battery systems that can be applied to various eco-friendly vehicles, including hybrid and electric vehicles. The battery system to be supplied by Hyundai Mobis will be installed in Volkswagen’s dedicated platform for next-generation EVs.

The latest deal is the first of its kind that Hyundai Mobis has ever signed with Volkswagen. It is also the first time it has ever won a billion-dollar order for EV components.

The contract could also potentially pave the way for further orders from Audi, Bentley, Lamborghini, Porsche and other brands within the Volkswagen Group, the world’s second-largest and Europe’s largest automaker.

To meet the demand from Volkswagen, Hyundai Mobis plans to build a new production facility near a Volkswagen factory in Spain after its board of directors approves the plan this year.

Hyundai Mobis currently operates battery system production facilities in Korea, China, and the Czech Republic. Additionally, the company is setting up new electric mobility bases in the U.S. and Indonesia, solidifying its global production capabilities in the EV sector.

“Hyundai Mobis has been establishing its expertise and competitive edge in the mass production of essential EV components for over 10 years since it opened Chungju Plant in Korea, a factory dedicated to the production of xEV components, in 2013,” the company said in a release.

Hyundai Mobis said it is “expecting additional orders for EV components in the global market,” given that global automakers have been making big investments in transitioning to EVs.

By Park So-ra and Yoon Yeon-hae

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