South Korea has seen a surge in the import of cost-effective Chinese-made Lithium Iron Phosphate (LFP) batteries. This trend is primarily due to the aggressive pricing strategy of Tesla, the world’s leading electric car manufacturer that uses LFPs, steering the electric car market towards a price-centric model. Consequently, domestically produced budget electric vehicles are increasingly being fitted with the more affordable LFP batteries.
According to trade statistics from the Korea Trade Association on Oct. 8, from January to August this year the import value of Chinese-made batteries for electric cars was US$4.47 billion. This marked a 114.6% increase from the same period last year. By August alone, the import value has already surpassed the entire previous year’s import value of US$3.49 billion. This year, there’s nearly a trade deficit of close to 6 trillion won from just the electric car battery segment.
Industry insiders attribute this sharp rise in battery imports to the broader adoption of Chinese-made LFP batteries by the domestic automobile sector.
In reality, Hyundai is selling its sport utility vehicle (SUV), the Kona Electric, with Chinese LFP batteries. Similarly, Kia uses these batteries in its Niro and Ray EV models. KG Mobility also launched its new electric car, Torres EVX, incorporating LFP batteries from the Chinese battery firm BYD.
The sales figures for electric vehicles fitted with LFP batteries are also on the rise. Last September, Tesla’s Model Y saw a whopping 4,206 units sold in South Korea alone, a tenfold increase from the previous month, making it the top-selling vehicle domestic or imported. This surge in sales came after the shift from batteries produced by LG Energy Solution in the U.S. to LFP batteries manufactured in Tesla’s Shanghai factory, resulting in a price reduction of approximately 20 million won.
LFP batteries, although lagging behind South Korean nickel, cobalt, and manganese (NCM) batteries produced by LG, Samsung, and SK in terms of energy density, which results in shorter driving range, have a distinct advantage. They offer superior safety by reducing risks of fires and explosions and, more importantly, come at a much lower cost. South Korean battery companies are paying heed to these market shifts and are diving into the development of LFP batteries. However, mass production might not be feasible until 2026.