China Maintains Unfair Subsidy Policy
The Chinese government has excluded electric cars equipped with Korean batteries from the list of electric vehicles eligible for subsidies once again. A Mercedes-Benz electric car loaded with batteries manufactured by SK Innovation was expected to be included in the list but failed to make the list.
According to the electric car battery industry on October 4, the Chinese Ministry of Industry and Information Technology recently announced the “List of Recommended Models of the 10th New Energy Distribution and Application in 2018.” The ministry selected 194 purely electric models of 100 carmakers, six plug-in hybrid models of five companies and 11 hydrogen fuel cell vehicles of five automakers, for subsidies.
However, models with batteries from three Korean makers -- LG Chem, Samsung SDI and SK Innovation -- were excluded from the subsidy list this time once again. It has been one year and 10 months since December 2016. SK Innovation highly hoped that a Mercedes-Benz electric vehicle powered by its battery would make the list but did not make it. In the electric car battery industry, experts say that the Chinese government scratched off models with Korean-made batteries on the list in order to protect its own electric car battery industry.
In fact, Chinese electric car battery manufacturers are growing fast thanks to the Chinese government’s subsidy policies. According to electric vehicle battery shipment rankings released by market researcher SNE Research recently, China's CATL shipped batteries of 8644.0 MWh, ranking second in electric car battery shipments after Japan's Panasonic (15.04 MWh) in the January-August period of this year.
On the other hand, LG Chem, the No. 1 electric car battery maker in Korea, posted batteries of 3.8GWh in shipment, with its shipment growth rate of 34.7% standing significantly lower than the market average. Samsung SDI’s shipments hit 1.8GWh, up 27.6% from the same period last year. This pushed its ranking to sixth place from fifth place a year ago.
"Electric vehicles need a nickel-enriched battery to increase mileage. Electric car battery makers need to make batteries with a nickel-cobalt-manganese (NCM) ratio of 8:1:1. Korean companies still outclass their Chinese counterparts in terms of competitiveness,” an industry official said. "China may maintain protection barriers until Chinese companies secure competitiveness."
In the meantime, according to the Korea Trade-Investment Promotion Cooperation, sales of electric cars in China surged to 569,000 units in 2017 from 14,600 in 2013. With a 39-fold increase over the four years, China is holding about 40% of the world electric car battery market. Korea's electric vehicle exports to China totaled US$107,380, down 33.6% from a year ago and amounted to none in 2017.