Hyundai Motor Group said that it is partnering with battery materials company EcoPro BM on Thursday to develop its own lithium iron phosphate, or LFP, batteries for electric vehicles.

Executives from Hyundai Motor Group, EcoPro BM and Hyundai Steel -- the carmaker’s steel manufacturing affiliate -- met Wednesday in Daejeon to discuss details on the joint research and future cooperation.

With the strategic partnership, which is part of the four-year project supported by the Ministry of Trade, Industry and Energy, the carmaker plans to jointly develop cathode materials for LFP batteries without precursors.

The new method directly synthesizes phosphoric acid, steel, powder and lithium, according to the carmaker. It could minimize the toxic chemicals released during the manufacturing process and cut production costs.

For the first stage, Hyundai Motor and Hyundai Steel plan to acquire recycled steel and turn it into high-purity fine powder. EcoPro BM will then use the powder to develop cathode materials for LFP batteries.

After testing the cathode materials, the auto giant looks to expand its capacity to make its own LFP batteries, which is essential for the competitive pricing of EVs.

“Korean companies highly rely on importing cathode materials and precursors. But with this method, we can set up a stable supply chain here. It can also help the company to up our game in EV battery technology,” said an official from Hyundai Motor Group.

Industry insiders say the carmaker’s full-fledged commitment is one of the key strategies to make a breakthrough in deepening EV chasm.

“Hyundai Motor previously delegated the battery research and development to its affiliate Hyundai Mobis,” said a source familiar with the matter on condition of anonymity. “But given that its rivals like Tesla and BYD are dominating the electrified car markets with volume segment models (low-priced vehicles), it is evident that the company is all out to move up the schedule to produce ‘Hyundai-made’ batteries.”

Lee Ho-geun, a car engineering professor at Daeduk University, noted, “The LFP batteries are expected to be installed in Hyundai’s Kona or small vehicles. If the price goes down, sales of low-mid priced EVs will skyrocket, giving momentum for the company to push through the ongoing EV slowdown.”

In August, the carmaker held an in-house conference where Hyundai Motor Co. President and CEO Chang Jae-hoon shared the 10-year strategy highlighting its battery manufacturing capacity.

It is reported that Hyundai Motor plans to set up a production facility of 1-2 gigawatt-hours within the research and development complex, which is currently under construction in Anseong, Gyeonggi Province, by 2027.