Plant-building Race
The implementation of the Inflation Reduction Act (IRA) has been fueling market competition between Korea and Japan over the U.S. electric vehicle battery market.
Japan's Panasonic is considering investing around US$5 billion (about 6.5 trillion won) to build a third electric vehicle battery plant in the state of Oklahoma in the United States according to overseas news outlets. Currently, Panasonic is running a battery factory with Tesla in the U.S. state of Nevada. A battery plant with an annual production capacity of 30 gigawatt hours (GWh) is also being built by the Japanese battery maker in Kansas of the United States. The amount of subsidies that Panasonic will receive is estimated at US$700 million (approximately 900 billion won), according to the Nihon Keizai Shimbun and Reuters on April 17.
Panasonic has maintained its battery market share in North America thanks to its partnership with Tesla. According to SNE Research, a market research institute specializing in energy, Panasonic posted a 48 percent share of electric vehicle battery sales in North America from January to October of last year, claiming first place. It was followed by LG Energy Solutions (18 percent), China’s CATL (14 percent), SK On (10 percent), and Samsung SDI (8 percent).
In particular, as the United States signed a “core mineral agreement” with Japan, the battle for market dominance is heating up between Korean and Japanese companies. Initially, the United States decided to only provide subsidies to companies of countries which signed a free trade agreement (FTA) with the United States. However, through the agreement, it has decided to grant the same status to Japan even though it has not signed an FTA. If a Panasonic battery goes into a Tesla car, Panasonic will receive a tax credit of US$7,500 from the U.S. government.
As a result, alliances are expected to increase between carmakers and Korean and Japanese battery companies in order to take bigger pieces of the North American market. The Wall Street Journal (WSJ) recently reported that Panasonic is discussing ways to supply cylindrical batteries to global automakers BMW and Stellantis. BMW is receiving prismatic batteries from Samsung SDI. Stellantis is promoting the establishment of North American joint ventures with LG Energy Solution and Samsung SDI. “I expect that competition will heat up between Korean and Japanese battery makers in preoccupying the U.S. electric vehicle market with the greatest growth potential,” said an official of the Korean battery industry.