KGM Rexton [Provided by KGM]
KGM Rexton [Provided by KGM]

KG Mobility (KGM) plans to borrow about 110 billion won ($75.1 million) to pay licensing fees for Chinese automaker Chery Automobile's plug-in hybrid electric vehicle (PHEV) platform technology. The move is part of a strategy to shorten new-model development timelines by adopting an external platform rather than building one in-house, and is expected to accelerate work on the Rexton successor KGM is co-developing with Chery.

KGM disclosed Tuesday that it would raise $75 million in short-term foreign-currency funds to pay the technology licensing fee to Chery Automobile.

Applying Shinhan Bank's opening exchange rate of 1,465.40 won per dollar posted Tuesday, the borrowing amounts to 109.91 billion won. The loan will increase KGM's total short-term borrowings by about 39 percent, from 281.39 billion won to 391.3 billion won. The amount borrowed represents 7.4 percent of the company's equity capital.

The funds will be raised through a one-month short-term loan rather than long-term facility investment financing. Shinhan Bank is the lending institution, and the loan matures one month from the contract date.

The borrowing follows a T2X platform license agreement KGM signed with Chery in 2024. KGM plans to use the roughly 110 billion won it borrows to pay the technology licensing fee.

KGM acquired a license in October 2024 to use intellectual property related to Chery's T2X PHEV platform. The license covers rights to use the platform in vehicle design, development and manufacturing, and runs for a minimum of eight years.

KGM is using the Chery platform to develop the SE10, a mid- to large-size SUV project that will succeed the current Rexton and is considered one of the company's next-generation flagship models.

In a recent name-preference survey KGM conducted among its dealers and internal staff, "Arirang" was among the candidate names put forward for the model.

Through its partnership with Chery, KGM is also pursuing future vehicle technologies beyond combustion-engine and hybrid platforms, including software-defined vehicles (SDV), electrical and electronic architecture, and autonomous driving. After the SE10, the company plans to roll out a series of eco-friendly models, including hybrid and extended-range electric vehicles (EREV).

The two companies' cooperation is expected to expand beyond technology transfer into a capital partnership. KGM is set to sign a strategic investment agreement with Chery Automobile in early August. Chery Chairman Yin Tongyue and President Zhang Guibing are expected to attend the signing ceremony, at which Chery's investment plan in KGM and the two companies' medium- to long-term cooperation roadmap are also expected to be announced.

Developing a proprietary platform requires enormous time and research and development expenditure, and KGM — a relatively small automaker — has concluded that leveraging proven external technology is the most practical way to speed up new-model launches. At the same time, the company faces the challenge of managing a substantial licensing cost burden and a growing dependence on an overseas partner for its core platform.


kwater@heraldcorp.com