In Thursday’s statement, it mentioned: including Hyundai Motor, LG Energy Solutions Co., Samsung SDI Co. and SK On Co., hearing their “concerns and difficulties” about the measures in the U.S. tax and energy bill, They hope that South Korean automakers and battery suppliers will quickly cut off the Chinese battery supply chain in order for the vehicles to qualify for a maximum $7,500 tax credit.
The move could violate the U.S.-South Korea free trade agreement and World Trade Organization rules, a trade ministry spokesman said on Friday.
South Korean battery makers currently account for about 30% of the global market and supply automakers such as Tesla, General Motors, Ford and Rivian Automotive Inc. Most electric vehicles are assembled in North America, but South Korean battery makers source most of their raw materials from China. Finding new energy suppliers is difficult in the face of surging demand and supply shortages.
The companies are awaiting more details on the U.S. rules, and some are already looking to diversify suppliers outside of China, according to people at South Korea’s top four battery and materials makers. People familiar with the matter said that the draft legislation is still not clear enough, and hopes to adjust the relevant threshold after US carmakers lobby Congress.
South Korean battery makers, which use chemistries like nickel, cobalt, manganese or aluminum, imported more than 80% of the key minerals from China in 2020, according to the Korea Institute for Industrial Economics & Trade. Japan also imported 80% of its hydroxide lithium and 96% of manganese from China for making batteries, the institute said.
“It’s not easy to change a metal supplier, and it’s even harder to refine metals at a low cost, which China does, especially in an eco-friendly way.”Said Kim Min-Ji, senior researcher at state-run Korea Institute for Industrial Economics & Trade.