China Excludes EVs with Korean Batteries from Subsidy List Again

The Chinese government excluded electric cars loaded with Korean batteries from its subsidy list once again. Although there was earlier an optimism that China's sanctions will be lifted, Korean batteries will have more uncertainties in the Chinese market as Korean battery-powered vehicles are excluded from the list.

According to the battery industry on July 11, the Ministry of Industry and Information Technology of the People’s Republic of China released this year’s seventh list of eco-friendly cars eligible for subsidies on July 10. A total of 340 vehicles were selected for subsidies, but those loaded with batteries of Korean companies such as LG Chem, Samsung SDI and SK Innovation were not included in the list. Electric vehicles loaded with batteries of LG Chem and Samsung SDI reportedly did not apply for the subsidies.

Initially, SK Innovation battery-powered vehicles were expected to be included in the subsidy list. This is because a Mercedes-Benz model equipped with SK Innovation batteries had passed the model approval, a stage just before the selection of subsidy receivers.

In May, the China Association of Automobile Manufacturers (CAAM) included three Korean battery companies in its list of excellent companies (white list), giving them a high anticipation. Being included in the white list does not mean being listed for subsidies. But Korean battery companies on the white list meant that China recognized Korean battery companies' technology and product quality.

As eco-friendly cars with Korean batteries did not make the subsidy list again this time, the sanction will last for about one and a half years.

It is a majority opinion that the Chinese government gave the sanction to Korean battery companies to retaliate against Korean companies for Korea’s deployment of the THAAD system and foster Chinese battery companies. But industry experts say that the measure aims to give Chinese battery companies, such as CATL and BYD, more opportunities for growth rather than retaliation against Korean companies.

In fact, after the exclusion of subsidies from the green cars with Korean batteries, Chinese companies are growing rapidly.

According to market researcher SNE Research, CATL of China ranked first in the global shipments of batteries for electric cars from January to May of this year. CATL with 4312MWh outclassed, for the first time, Panasonic (4302MWh) which had been the world's number one player in the electric vehicle battery industry.

BYD, a Chinese company, picked up the third place with 2424MWh while LG Chem (2126MWh) and Samsung SDI (1091MWh) took fourth and sixth place respectively.

There is concern that if the Chinese government concentrates more on the growth of Chinese battery companies, China will continue to scratch off Korean batteries on the subsidy list until 2020 when the subsidy system will be completely abolished.

"Even though there is a favorable atmosphere for South Korea in China compared to the past, it is not yet easy to predict when Korean battery companies will be included in the subsidy list," said an official of the Korean battery industry.