Preparing for One Year Later
South Korea's three major electric vehicle (EV) battery manufacturers -- Samsung SDI, LG Chem and SK Innovation -- are setting up battery manufacturing facilities in China, as the Chinese government’s subsidies for EVs are scheduled to be repealed in 2020.
Samsung SDI is considering building an additional EV battery manufacturing plant with an area of 160,000 square meters in Xi’an. According to industry sources, the plant, which will have five lines to produce 60 Ah batteries for use in 400,000 vehicles, will cost 1.7 trillion won (US$1.5 billion).
Samsung SDI is currently running EV battery manufacturing facilities in Ulsan of Korea, Xi’an and Hungary, producing 60,000, 30,000 and 50,000 units a year, respectively. The company is anticipating that fair competition will be possible in China once the Chinese government’s subsidies are repealed.
The Chinese government has provided the subsidies for EV producers since 2016. At the same time, it has protected Chinese EV battery manufacturers by ruling out EVs equipped with batteries supplied by South Korean companies. Under the circumstances, South Korean EV battery suppliers have had to struggle in the Chinese EV market, which is estimated to be equivalent to 50% of the global market in 2025.
LG Chem, which has the highest market share in the South Korean EV battery market, is moving swiftly ahead of the abolition of the subsidies. The company initiated the construction of its second EV battery plant in Nanjing last month and the initial operation of the plant is scheduled for late next year. The plant will produce at least 500,000 high-performance batteries a year for a full-charge driving range of 320 km. LG Chem is going to invest 2.1 trillion won (US$1.9 billion) in the plant until 2023.
SK Innovation, a late starter in the industry, posted a battery shipments growth of 168.5% from January to October this year, outperforming both LG Chem and Samsung SDI. SK Innovation announced in October that it would build lithium-ion battery separator and ceramic-coated separator manufacturing facilities in Changzhou, Jiangsu. Also, SK Corporation, an investing holding company, acquired shares from Wason, a Chinese copper foil manufacturer, for approximately 270 billion won (US$243 million).