LG Chem and Samsung SDI failed again to receive electric vehicle (EV) battery subsidies from the Chinese government. This has continued for three years since the THAAD deployment in South Korea in 2016. On the contrary, Chinese EVs and EV batteries are receiving subsidies in South Korea.
The Ministry of Industry and Information Technology of China has recently decided to provide no subsidies for EVs equipped with batteries supplied by the South Korean companies. The vehicles are four Dongfeng Renault and one Chongqing Jinkang models, which received type approvals last month as a step prior to the subsidies. The subsidy per vehicle is approximately 10 million won and competition in the local market is nearly impossible for those without it. Beijing Benz EVs equipped with SK Innovation batteries received a type approval in May 2018, yet no subsidy has been provided for the vehicles so far.
The Chinese government has never explained why. Experts point out that its intention is to protect the Chinese EV and EV battery industries by taking advantage of the THAAD deployment.
Before the THAAD deployment, LG Chem used to supply its EV batteries to Great Wall Motors, SAIC Motor, FAW Group and Changan Automobile, while Samsung SDI used to supply its EV batteries to Yutong, Foton and JAC. The South Korean companies built battery manufacturing plants in China for the supply, too. However, their local EV battery sales have dropped since the deployment.
Yet Chinese companies are still enjoying subsidies in the South Korean market. According to the Korea Automobile Manufacturers Association, 40.4 percent of last year’s total electric bus sale subsidies went to Chinese companies. Under the circumstances, BYD, the largest EV company in the world, is planning to enter the South Korean EV parts market.