Samsung SDI and multinational automotive manufacturing corporation Stellantis will build their second electric vehicle(EV) battery factory in the U.S.

The two companies announced on Monday that they signed a memorandum of understanding to build the second plant of their joint venture, Star Plus Energy, which was set up in the U.S. state of Indiana last year.

The envisioned plant will have an initial production capacity of 34 gigawatt hours(GWh) with 2027 as the target year for the start of production, but the companies have not revealed the estimated cost of the facility.

The two companies’ first plant, which is currently under construction in the city of Kokomo in Indiana, is set to start production from the first quarter of 2025 with a capacity of 33 GWh, bigger than the initially-planned 23 GWh. 

The decision to build another plant comes amid a sharp surge in demand for EVs in North America.

The jump in demand for EVs and their batteries comes after subsidies for EVs and support for eco-friendly energy expanded with the implementation of the Inflation Reduction Act.