Although battery shipments in China that is the world's largest electric car market are on a sharp rise, China’s import of electric vehicle batteries from South Korea declined for five consecutive years. This is because the Chinese government is driving a localization policy to nurture its electric car battery industry and at the same time, is virtually banning the sale of Korean electric vehicle batteries as its retaliations against South Korea for the latter’s deployment of the THAAD System.
According to the battery industry on August 4, electric car battery shipments in China are expected to quadruple from 40.6GWh this year to 151.6GWh in 2021.
China's electric vehicle production shot up every year from 84,000 units in 2014 to about 380,000 units in 2015 and about 520,000 units in 2016. The Chinese government plans to increase its electric vehicle production to five million units by 2020.
Batteries account for more than 40% of the prime cost of EVs which is closely linked to the growth of the EV market. Last year, the growth rate of global electric vehicle battery production reached 78.6%, more than double 37% of that of global electric vehicle production. However, China's electric vehicle battery imports dropped 7.4 percent year-on-year to US$3.056 billion last year, recording a drop for the third consecutive year. Among them, imports from Korea have been going downhill. According to the KOTRA, China's imports of Korean electric car batteries fell from US$1.576 billion in 2012 to US$1.019 billion last year.
This is because the Chinese government built import barriers to preempt the global electric car battery market. They are also deliberately rejecting Korean batteries due to the deployment of the deployment of the THAAD System.
The new Chinese Ministry of Industry and Information Technology excluded electric cars loaded with Korean batteries such as those of LG Chem and Samsung SDI from a list of electric vehicles for subsidies for the seventh time this year. However, in the first half of the year, LG Chem accounted for 12.3% of the global electric car battery market, coming in second in the market, rising by four notches over the same period of last year. Samsung SDI placed fifth with a market of 5%, climbing up two notches.
However, as South Korea’s rivals such as the United States and Japan are ramping up the export of batteries for electric cars to China, they are becoming a threat to the Korean battery industry. Last year, imports of Japanese, Vietnamese and US batteries swelled 13.4%, 20.9% and 28.1% from the previous year, respectively. In the world electric car battery market, China’s BYD and CATL are in hot pursuit of LG Chem as the third and fourth rankers with 9.2% and 7.8% shares, respectively.