China moving to easy up on Korean batteries

Chances are returning for Korean lithium-ion battery makers to obtain contracts from Chinese electric vehicle (EV) makers, as EVs equipped with their batteries recently made it onto a recommended list by the Chinese government.

According to the China Association of Automobile Manufacturers (CAAM), LG Chem Nanjing, Samsung SDI Xian and BESK Technology, a joint venture of SK Innovation, were included in a preliminary list of the top quality certified companies, Wednesday.

This is a preliminary list and the CAAM is scheduled to announce its final version on May 28 after going through an appeal process.

This could work as a positive sign for Korean battery firms as they have been struggling with their EV battery businesses in China where the government had excluded EVs equipped with their batteries from a subsidy list since last year.

Industry watchers have viewed the decision as retaliation against Seoul’s deployment of a U.S. Termi- nal High Altitude Area Defense (THAAD) system in March last year.

With the decision, LG Chem, Samsung SDI and SK Innovation have hit a snag. It has been reported that that the operation rate of battery plants of LG Chem and Samsung SDI in China were at 10 percent last year. BESK Technology stopped producing battery packs early last year.

The Korean government is also pushing China to take a more dovish policy stance on adopting batteries for EVs made by Korean battery makers.

Trade Minister Paik Un-gyu made the request in a meeting with Chinese Minister of Industry, Information and Technology Miao Wei at the Hotel Shilla in Seoul.

In response to Paik’s request, Miao said the Chinese government had already approved a Merceds-Benz vehicle, powered by a battery from a Korean maker, Paik told reporters after the meeting.

“It (being included in the white-list) will be a positive signal from the Chinese government to Chinese car manufacturers,” Paik told reporters.

During the meeting, Paik emphasized the need for a fair business environment to promote free competition and cooperation between companies in the two countries. Noting that what kind of battery pack is used depended on Chinese car makers not the Chinese government, Paik also urged Korean battery makers to beef up their marketing efforts with Chinese carmakers.

Industry watchers say being “white-listed” would have no immediate effect but it would result in positive effects for Korean battery manufacturers.