Samsung, LG and other Korean battery manufacturers increase investment in China: targeting the new energy vehicle industry

Samsung, LG and other Korean battery manufacturers increase investment in China: targeting the new energy vehicle industry

According to BusinessKorea Beijing time on May 5, South Korean battery manufacturers are increasing their investment in China as subsidies for Chinese automakers will end at the end of next year. China's subsidy policy is aimed at nurturing its domestic battery industry to compete with international rivals. There are signs that the Chinese market will open up again to South Korean battery manufacturers such as LG Chem, Samsung SDI and SK Innovation.

Some Chinese automakers are in talks with South Korean battery makers to adopt their products, according to battery industry sources.

"South Korean battery makers are receiving inquiries from automakers. This is because automakers need to prepare for their new models as China's electric vehicle subsidy policy is set to end at the end of 2019," said an executive at a South Korean battery company.

Since 2015, South Korea's three largest battery manufacturers have been operating factories in China, supplying batteries to SAIC, Yutong, Foton and BAIC. However, since June 2016, the Chinese government has excluded South Korean batteries from the subsidy program. Since then, South Korean battery manufacturers have basically lost Chinese customers.

However, with China planning to completely cancel subsidies for electric vehicles in 2020, Korean battery manufacturers have once again ushered in opportunities. Supplying batteries to Mercedes-Benz and General Motors has proven Korean companies' competitiveness in price, performance and stability. In recent years, Volkswagen has also chosen Korean companies as battery suppliers for its next electric car. Korean industry experts said that Chinese automakers seek to export cars abroad, so they will have no choice but to consider using batteries produced by Korean companies, which allow electric vehicles to travel more than 300 kilometers on a full charge.

Therefore, Korean battery manufacturers are resuming their investments in China. Recently, SK Innovation changed its name from SK Battery China Holdings to "SK Blue Dragon Energy" and invested 86.4 billion won in the company. Industry executives pointed out: "It costs hundreds of billions of won to build a battery factory. If SK takes out the investment funds all at once, it will bring a huge financial burden to it. Therefore, SK will make diversified investments. This can be understood as a preliminary move towards localized production."

In addition, Samsung SDI also stated in its first quarter financial report: "We will prepare for the end of (China's) subsidy policy in 2020." LG Chem announced that it will invest 23.94 billion won to establish a battery material production joint venture in China.

Competition in battery technology is also fierce. In the second half of this year, SK Innovation will begin mass production of NCM811 cells, which can enable cars to achieve a range of 500 kilometers. LG Chem plans to mass produce NCMA712 cells in 2021 and NCMA batteries in 2022. Samsung SDI is fully committed to developing nickel-cobalt-aluminum (NCA) batteries.

Battery supply for electric vehicles, plug-in hybrids and hybrids rose to 10.28 GWh in the first quarter of this year, up 57% from a year earlier, according to market research firm SNE Research.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.

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