SK Innovation Co. has halted operation of its battery packing plant in China. The company said that it is the operational measure in the wake of Beijing's move to stop a subsidy to electric vehicle makers that use parts from non-Chinese manufacturers and entirely unrelated to China’s retaliation on South Korea over the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system.
An official from SK Innovation said on March 29, “We stopped producing battery packs for electric vehicles (EVs) from Beijing BESK Technology factory in China from early this year. Currently, our joint venture partners – Beijing Electronics and Beijing Automotive Industry Holdings - are in negotiations with the Chinese government to resume the operation.”
Beijing BESK Technology Co., a joint venture set up in late 2013 between SK Innovation and China’s state-run Beijing Electronic and Beijing Automotive Industry, produces 10,000 units of EV battery packs a year, which is relatively smaller than LG Chem with 50,000 units a year and Samsung SDI with 40,000 units. The official from SK Innovation said, “Orders for the joint-venture factory in Beijing has begun to rapidly fall in the fourth quarter of last year. We had to stop operating the plant due to the drop in orders from automakers after the Chinese government has introduced an EV subsidy package which is favorable to Chinese battery producers from last year.”
Accordingly, SK Innovation said that it is overanalyzing the situation linking the shutdown with China’s retaliation against South Korea over the THAAD deployment.
The official from SK Innovation said, “Our joint venture partners – Beijing Electronic and Beijing Automotive Industries – which have a combined 60 percent stake in the Beijing BESK Technology that supplies battery packs to Beijing Automotive Industry decide on how to operate and manage the factory. So, it is inappropriate to directly connect the shutdown with the THAAD issue.”
He added, “We are planning to continuously produce battery packs and build a joint venture to produce battery cells with Chinese partner companies.”