Canada and South Korea signed a memorandum of understanding Tuesday to advance Korean auto manufacturing in Canada, linking industrial cooperation to Seoul’s bid for a $100 billion submarine contract.
Industry Minister Melanie Joly and South Korean counterpart Kim Jung-kwan signed the agreement during a high-level South Korean delegation visit to Ottawa focused on Canada’s submarine procurement competition. The non-binding memorandum pledges cooperation on electric vehicle manufacturing, battery production, hydrogen-powered commercial vehicles, and critical mineral extraction.
Hyundai Motor Group executive chair Chung Euisun joined the delegation alongside South Korean presidential chief of staff Kang Hoon-sik and Defense Minister Lee Yong-cheol, following Ottawa’s request that both South Korea and Germany facilitate auto industry production pledges as part of submarine bids.
Representatives from Hyundai and submarine competitor Hanwha Ocean participated in a Canada-Korea auto forum on Monday, where Canadian executives pitched Hyundai on moving manufacturing to Canada. Korean automakers hold approximately 12% of the Canadian market with steady annual growth.
The push comes as Canada produced 1.21 million vehicles in 2025, down from over two million annually before the pandemic. Toyota started production of the sixth-generation RAV4 last week, following a $1.1 billion investment, bringing Toyota’s total Canadian investment to over $12 billion. The Ontario manufacturer employs 8,500 workers and assembled 535,000 vehicles in 2025, making it Canada’s largest automaker by volume.
Also read: Toyota Starts $1.1 Billion RAV4 Production in Ontario
Hyundai does not currently have Canadian production facilities. The company briefly operated an assembly plant in Quebec in the late 1980s before closing it. South Korean company LG Energy Solution meanwhile has partnered with Stellantis to build the $5 billion NextStar battery plant in Windsor, Ontario, which began production in October 2025 with approximately 1,100 employees.
The submarine contract for up to 12 diesel-electric vessels could be valued at approximately $100 billion over 30 to 40 years. Canada narrowed the competition to South Korea’s Hanwha Ocean and Germany’s ThyssenKrupp Marine Systems. Hanwha signed a separate memorandum pledging $275 million toward a new steel mill at Algoma Steel, plus $70 million in steel purchases.
Also read: Canada Leverages Submarine Deal For Auto Manufacturing Guarantees
A federal evaluation document allocates 50% of the total score to long-term sustainment, 20% to technical capability, 15% to financial capacity, and 15% to economic benefits for Canada. Final proposals are due in March with awards expected later this year.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
