Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Korean battery makers scrambling to increase production in US
By Kim Bo-eun
By Kim Bo-eun
Local battery makers are in a rush to expand production facilities in the U.S. to capture opportunities amid the fast-growing market for electric vehicles (EVs) there.
According to Reuters, Thursday, LG Energy Solution (LGES) will officially announce a decision to build a second battery plant in the U.S., Friday, in a cooperative venture with GM.
The two companies earlier set up Ultium Cells that will produce batteries for GM's EVs manufactured in Lordstown, Ohio.
The second factory will be built in Tennessee nearby GM's Spring Hill plant and will likely require a similar $2.3 billion investment as the Lordstown plant, the report said.
LGES said it could not comment on the report. The battery maker said last month that its joint venture with GM was looking to build a second battery plant, and that the site and scale of investment would be decided on in the first half of the year.
The firm said the battery plant would use state of the art technology to provide a stable supply for GM's EVs.
The LG affiliate earlier said it would separately invest up to 5 trillion won to build new production plants in the U.S. by 2025 and decide on two sites by June.
SK Innovation (SKI), which is constructing two battery cell plants in Georgia, got the green light Sunday to continue building the factories after it settled a major battery dispute with LGES. The SK battery affiliate's first plant in Georgia is nearing completion and the company plans to launch operations soon. The second plant is about 20 percent complete.
The battery maker is set to further engage in aggressive investments, pledging additional overseas spending Sunday.
Samsung SDI is the only local battery maker without a manufacturing plant in the U.S., although it does have an assembly plant in Michigan.
The company, which is eyeing sites for a battery cell plant, is not ruling out the possibility of building the facility there. This has become more likely after U.S. EV startup Rivian unveiled this week that the Samsung unit would supply batteries to the company. Rivian is backed by investments from Amazon and Ford.
"The U.S. is an important market and the tariff incentive is a factor that should be considered," an industry official said, declining to elaborate.
Under the United States-Mexico-Canada Agreement (USMCA), battery makers will be able to enjoy tariff-free benefits if they base 75 percent of their production in the region by July 2025.
Samsung SDI said in a conference call on its 2020 earnings that it was looking into new production sites. Outside of Korea, the company has production sites in Hungary and China.
President Joe Biden holds up a silicon wafer as he participates in the virtual CEO Summit on Semiconductor and Supply Chain Resilience in the Roosevelt Room of the White House, Washington, April 12, 2021. AP-Yonhap
The Korean battery trio are increasingly paying attention to the U.S. market. According to energy market tracker SNE Research, demand for EVs in the U.S. is set to grow 12-fold to 3.82 million vehicles in 2025 from 305,000 vehicles in 2020. The U.S. market is set to show significantly sharper growth than markets in China and Europe ― it currently ranks third, accounting for a 20.8 percent global share, after China and Europe with 38.6 percent and 32.1 percent, respectively.
"Reshoring incentives provided by the Biden administration are also a factor, but the main reason to base production in the U.S. is the expected exponential growth there under this administration," an industry official said.
"The market for EVs centered on China and Europe, but under the Biden administration's environmental policies, the U.S. market is set to see a huge push. Competition can only heat up among battery makers to move faster to gain a larger slice of the pie."
On top of these factors, industry sources said the President Biden's moves to bring back manufacturing to the U.S. is also weighing on battery manufacturers.
"Batteries are considered the next semiconductors. The U.S. battery market is set to see explosive growth, and greater pressure is being placed on Korean firms to rush to the U.S. due to the Biden administration's policies," an industry official said.