Battery manufacturers such as LG Chemical will invest in a battery plant in China as subsidies for electric vehicles expire

Battery manufacturers in South Korea are taking another chance as Beijing plans to completely eliminate subsidies for electric vehicles by 2020.

South Korean battery makers are reportedly ramping up their investments in China after Chinese car makers revealed that subsidies for electric vehicles would end at the end of the year.

Sources say some Chinese automakers are in talks with Korean battery makers to adopt their products. At the same time, executives from a South Korean company confirmed: "Korean battery manufacturers are being questioned by car manufacturers. That's because automakers need to prepare for new car development as China's subsidy for electric vehicles ends in 2019. "

In fact, as early as 2015, South Korea's three major battery manufacturers began operating factories in China, providing batteries for SAIC, Yutong, Fukuda and Beiqi. However, in June 2016, the Chinese government excluded Korean batteries from the subsidy program. Since then, Korean battery manufacturers have gradually lost their Chinese customers.

Now, with the government planning to completely eliminate subsidies for electric vehicles by 2020, South Korean battery makers have another chance.

Recently, SKInnation renamed its SK Battery China Holding Company as "SK Blue Dragon Energy" and invested 86.4 billion won. "It takes hundreds of billions of won to build a battery factory," said SK Innovation 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 will invest 239.4 billion won to establish a joint venture in the production of battery materials in China.

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.

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