'More gov't support needed as China narrows gap in EU battery market'

LG Group Chairman Koo Kwang-mo, right, inspects the calcination process line at the LG Chem Cheongju plant in North Chungcheong Province, April 17. Courtesy of LG Group

By Kim Hyun-bin

The Korea International Trade Association (KITA) says the government should pursue more support measures to maintain competitiveness in the EU battery market as China continues to narrow the gap.

In a report titled "The Greatest Battleground for Global Batteries, Trends and Implications of the EU Battery Market," the KITA's International Trade and Trade Research Institute noted that the EU is actively attracting investment from global battery companies in order to strengthen battery manufacturing capabilities in the region and foster the waste battery recycling industry.

With the EU expected to account for about a quarter of global lithium-ion battery demand by 2030, many global battery companies have announced new facility investment and expansion plans in the EU.

Chinese companies, which have had difficulty entering the U.S. market due to the U.S. Inflation Reduction Act (IRA), are rapidly expanding investment in the EU, intensifying market competition with Korean companies.

The U.S. is pushing to build a battery supply chain that excludes China, while the EU is open to attracting investment from Chinese companies. According to market researcher SNE Research, China's EU battery market share rose from 14.9 percent in 2020 to 34.0 percent last year, while Korea's share fell from 68.2 percent in 2020 to 63.5 percent last year.

"The next one to two years, when partnerships between EU OEMs and battery companies are in full swing, is a critical time that will determine the game of the global battery industry," the report stated. “Funding and technology that can quickly expand production facilities to meet the different requirements of each automaker are the keys to competitiveness.”

As battery production in the EU increases, battery materials and parts and equipment exports are also increasing. KITA warned that without a prompt response from the Korean government and business, there is a risk of Korean players being overtaken by Chinese companies backed by the Chinese government's financial support and price competitiveness.

“Battery is a national high-tech strategic industry and Korea's flagship industry with a large ripple effect on exports, production and employment. There is a possibility of them being hit too hard to recover, being pushed out of the competition,” Kim Hee-young, a researcher at the KITA, said. “There should be intensive financial support and policy efforts for the battery industry so that Korean companies can compete on an equal footing with Chinese companies in the EU market.”