The Real Reason
The reason for the failure of Samsung SDI and LG Chem to get electric-car battery standard certification from Chinese government has been revealed to be the short operation period of the battery cell factories in China.
According to Samsung SDI on 22, the Chinese government rejected the applications of Samsung SDI and LG Chem, saying that the local battery cell factories must have been operated more than one year. Since such a requirement had not been included to get the certification standard, neither of the companies expected their refection. LG Chem and Samsung SDI each built an electric-car battery factory last October in Nanjing and in Xi’an, China; respectively.
The Chinese Ministry of Industry and Information Technology announced the list of 31 companies that were certified by the “Forth Electric Car Battery Standard.” LG Chem and Samsung SDI were excluded from the list. Considering the presences of the local factory in China, the production capacity, and the scale of research and development, the applications of Samsung SDI and LG Chem were expected to be accepted without difficulty. Hence, the result was shocking.
If there is no new variable, their applications are expected to be accepted after the coming October, when the operation period of their local factories exceeds one year. SK Innovation Co., on the other hand, was not able to even apply for the certification as they do not have a local factory in China. Consequently, SK Innovation is now considering to build a local factory in China.
The purpose of Chinese government’s introducing the certification system for electric-car battery is allegedly to contribute to making a sound battery market by excluding insolvent enterprises or fake batteries. The Chinese government had declared a war on fake batteries. Earlier this year, the Chinese government declared a war against fake batteries and gathered opinions on the guideline to establish battery standards from Chinese automakers.
The Chinese government, however, didn’t inform the Korean battery makers of the disadvantages when they failed to get the certificate. Consequently, Samsung SDI and LG Chem didn’t recognize the importance at first and considered it just a recommendation, which made the two battery makers hurry up preparations for the fourth certification starting in April. They didn’t participate in the third certification.
Some people observe that only the buyers of the electric vehicles equipped with the certified batteries will receive the subsidy, but contradictory rumors are just floating in the industry as the Chinese government has not yet made any official comment on them.
Some view the failure of Samsung SDI and LG Chem to get the certificate was attributable to the Chinese government’s trial to hold the Korean electric-car battery makers in check. Such a view was seemingly to be supported as the Chinese government excluded the tri-system batteries, which are used for local electrical busses and sourced mainly from the Korean “big 3” battery makers, from the list of subsidized items
The Chinese governments’ decision to exclude Korean companies this time, however, seems to have no intension to curb Korean companies, as shown in the case the Shenzhen factory of a Chinese influential company BYD was also excluded from the list.