By Jhoo Dong-chan
Batteries are considered the centerpiece not only in future cars but also in almost every high-tech industry.
Although boasting a world-class level in related technologies, the nation’s battery industry is seemingly losing turf for political reasons. Industry insiders have called for immediate government support, but they criticize that authorities still sit idly by and just watch Korean firms losing business to their Chinese and Japanese rivals.
The Chinese government announced last week it has, once again, excluded Korean battery suppliers from subsidies for electric vehicle (EV) buyers. In other words, those EVs equipped with Korean batteries products are not eligible for subsidies.
The Chinese government said it implemented the measure following a Hong Kong electric bus explosion accident in December 2015. The bus was equipped with a tertiary-system battery utilizing nickel, cobalt and manganese as energy sources, and Beijing said it started prohibiting the sale of such batteries in the Chinese market to prevent similar accidents.
Chinese authorities have banned Korean batteries from using a similar system beginning last December. However, the measure did not apply to Chinese companies. A number of Chinese battery suppliers using the same technology have reportedly still received the subsidies.
“The Hong Kong electric bus accident is an excuse and we suspect that is not the real reason,” a car industry insider said on condition of anonymity.
“Chinese government is rather imposing economic retaliation against Korean products over the deployment of a U.S. missile shield here. The government should immediately step in to find a countermeasure to ease the damages.” China has opposed the U.S. anti-missile system deployed in Korea.
A supply shortage is another factor choking the nation’s battery suppliers.
The price of cobalt, a core material source for batteries surged to 68.6 million won ($61,000) per ton last month, from the January price of $32,000 after the Democratic Republic of the Congo, the world’s largest cobalt producer, decided to cut its output.
Chinese battery suppliers have bought a number of mines around the world to stabilize the price of raw materials for batteries, but Korean firms haven’t shown any decisive move yet.
The nation’s slow growing EV market is another reason behind Korean battery suppliers’ struggle.
In order to introduce more EVs on the streets, Japan started to build infrastructure for charging stations five years ago. Currently, there are about 40,000 charging stations there.
Under its plan to introduce more than 5 million EVs by 2020, the Chinese government has also carried out massive support for its EV makers.
Thanks to government supports, 650,000 EVs were registered in China last year to become the world’s largest EV market.
In comparison, Korean consumers have looked away from EV models due to the lack of infrastructure. There are 5,000 charging stations across the country and only about 10,000 EVs were registered in Korea last year.