Lithium Battery Industry Opportunities: Samsung LG and other Korean battery manufacturers to increase investment in China

Batteries supplied to electric, plug-in and hybrid vehicles increased to 10.28 GWh in the first quarter of this year, up 57 percent from a year earlier, according to market research firm SNEResearch.

South Korean battery makers are stepping up their investments in China as subsidies to Chinese carmakers end at the end of the year, Yuming reported on May 5. The subsidy is aimed at fostering a domestic battery industry to compete with international rivals.

South Korean battery makers such as Samsung LG are investing more in China: an opportunity

Figure: Electric Car Batteries

There are signs that the Chinese market will once again open to Korean battery makers such as LG Chemical, Samsung SDI and SKInnation.

Some Chinese automakers are in talks with Korean battery makers to adopt their products, according to battery industry sources.

"Korean battery makers are being questioned by carmakers. That's because automakers need to prepare for their new car development, as China's electric-vehicle subsidy policy ends at the end of 2019, "says an executive at a South Korean battery company.

Since 2015, three of South Korea's biggest battery makers have been operating factories in China, providing batteries to SAIC, yutong, Fukuda and BAIC. Since June 2016, however, Beijing has excluded Korean-made batteries from subsidies. Since then, Korean battery makers have largely lost their Chinese customers.

However, with China planning to completely eliminate subsidies for electric vehicles by 2020, South Korean battery makers are once again taking the chance. The supply of batteries to Mercedes and General Motors has demonstrated the competitiveness of Korean companies in terms of price, performance and stability. In recent years, Volkswagen has also chosen South Korea as its battery supplier for its next electric car. South Korean industry experts say Chinese carmakers are seeking to export cars abroad, so they will have no choice but to consider using batteries made by South Korean companies that allow electric cars to travel more than 300 kilometers at a time.

As a result, Korean battery makers are resuming investment in China. SK Innovation recently changed its name from SK Battery China to "SK Blue Dragon Energy" and invested 86.4 billion won in the company. "It takes hundreds of billions of won to build a battery factory," said industry executives. If SK takes out investment funds at once, it will bring a huge economic burden. SK will therefore diversify its investments. This can be understood as an initial move towards localized production. "

In addition, Samsung SDI also stated in its first-quarter financial report: "We will prepare for the end of the subsidy policy[in China] by 2020. LG Chemical announced that it would invest 239.4 billion won to establish a joint venture in China to produce battery materials.

Competition for battery technology is also fierce. In the second half of this year, SK Innation will begin mass production of the NCM811 core, a battery made of this material that will allow the car to achieve a mileage of 500 kilometers. LG Chemical plans to mass-produce NCMA712 cores in 2021 and NCMA batteries in 2022. Samsung SDI is fully developing nickel-cobalt aluminum(NCA) batteries.

Batteries supplied to electric, plug-in and hybrid vehicles increased to 10.28 GWh in the first quarter of this year, up 57 percent from a year earlier, according to market research firm SNEResearch.

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