South Korean battery manufacturers such as Samsung LG increased investment in China: the subsidy is over, the opportunity is coming

According to Business Korea Beijing May 5, as subsidies to Chinese automakers will end by the end of next year, Korean battery makers are increasing their investment in China. China's subsidy policy aims to nurture the domestic battery industry and compete with international rivals. There are signs that the Chinese market will once again open to Korean battery manufacturers such as LG Chem, Samsung SDI and SK Innovation.

According to battery industry sources, some Chinese automakers are negotiating with Korean battery manufacturers to adopt their products.

“Korean battery manufacturers are accepting inquiries from automakers. This is because, as China’s electric vehicle subsidy policy ends at the end of 2019, automakers need to prepare for their new models,” said a senior executive at a Korean battery company.

Since 2015, South Korea's three major battery manufacturers have begun to operate factories in China to supply batteries for SAIC, Yutong, Futian and Beiqi. However, since June 2016, the Chinese government has excluded Korean-made batteries from subsidies. Since then, Korean battery manufacturers have basically lost Chinese customers.

However, as China plans to completely eliminate subsidies for electric vehicles by 2020 and Korean battery manufacturers are once again welcoming opportunities. Supplying batteries to Mercedes-Benz and General Motors has proven Korean companies' competitiveness in terms of price, performance and stability. In recent years, Volkswagen has also chosen Korean companies as its next battery supplier for electric vehicles. Korean industry experts say that Chinese automakers are looking to export cars abroad, so they will have no choice but to consider using batteries made by Korean companies that can fully charge electric cars for more than 300 kilometers at a time.

Therefore, Korean battery manufacturers are resuming investment in China. Recently, SK Innovation changed the company name from SK Battery China Holdings to “SK Blue Dragon Energy” and invested 86.4 billion won in this company. Industry executives pointed out: "It takes hundreds of billions of won to build a battery factory. If SK spends a single investment fund, it will bring huge economic burden. Therefore, SK will diversify its investment. This can be understood as local. Initial measures for chemical production."

In addition, Samsung SDI also said in its first-quarter earnings report: "We will prepare for the (China's) subsidy policy to end in 2020." LG Chem announced that it will invest 239.4 billion won to build a battery material production in China Joint venture.

The competition about battery technology is also very intense. In the second half of this year, SK Innovation will begin mass production of NCM811 batteries, and batteries made from this material will enable the car to achieve a cruising range of 500 kilometers. LG Chem plans to mass-produce NCMA712 cells in 2021 and mass-produce NCMA batteries in 2022. Samsung SDI is working hard to develop nickel-cobalt-aluminum (NCA) batteries.

According to market research firm SNE Research, batteries supplied to electric vehicles, plug-in hybrids and hybrids increased to 10.28GWh in the first quarter of this year, an increase of 57% over the same period of the previous year.

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