Korean battery makers losing momentum in China

The Korea Times

The Korea Times

Business

Sat, September 30, 2023 | 19:23

Tech

Korean battery makers losing momentum in China

Posted : 2018-06-10 21:06

Updated : 2018-06-10 22:39

By Baek Byung-yeul

Korean lithium-ion battery makers are losing their share in the electric vehicle (EV) battery market as EVs equipped with their batteries have been excluded from a subsidy list in China which has the biggest EV market in the world.

Beijing has refused to give subsidies to leading Chinese EV makers for cars using battery packs supplied by Korean makers such as LG Chem and Samsung SDI.

Its National Development Reform Commission, which oversees investment in the auto industry, previously halted a license program to rein in capacity expansion. But it later resumed permits to make batteries for U.S.-based carmakers Ford Motor and Tesla. The permission comes after Beijing announced a series of measures that would allow foreign firms to step up investment in its estimated $11 trillion economy.

China is the world's strongest EV market both in terms of market size and growth potential. Data provided by research firms showed that 600,000 EVs were sold in China last year, a 70 percent increase from the previous year, and more than double the United States' EV market of 280,000 last year.

It is widely alleged that the decision harming the Korean firms was in retaliation against Seoul's deployment of a U.S. Terminal High Altitude Area Defense (THAAD) system. Following the decision, the operation rate of Korean battery pack makers' plants there, including LG Chem and Samsung SDI, dropped to 10 percent last year; while BESK Technology, a joint venture of SK Innovation halted production.

According to a recent report by SNE Research, LG Chem and Samsung SDI also saw their market share fall during the first four months of this year.

LG Chem saw its global market share drop from 13.8 percent last year to 10.6 percent.

As the result, LG Chem fell from second to fourth in the global rankings, following Japan's Panasonic and Chinese makers CATL and BYD.

Samsung SDI also saw its market share fall from 6.8 percent to 5.6 percent, placed it sixth.

While Korean makers have been losing share, Chinese companies saw their shipments increase.

CATL saw a whopping 261.1 percent increase in shipments from 2016. Its market share was 7.2 percent that year but rose to 14.4 percent placing it second in the market. BYD saw 180.6 percent increase.

Overall, five Chinese battery makers made the top 10 list. The recent breakthrough by Chinese battery makers came from increased domestic demand for electric buses and trucks.

Industry watchers say Korean battery firms don't need to worry too much.

"The EV battery business is in its early stages and most seeing significant growth as more people buy EVs," a source said.

He added that Korean battery makers will see progress as they were included on a preliminary "white-list" of top quality certified companies by the China Association of Automobile Manufactures last month.

"Though there will be no immediate effect, there is cause for optimism," the source said, adding the Chinese government's plan to end all subsidies by 2020 will work positively for them.

baekby@ktimes.com