�Bruce Ein­horn and Hee­jin Kim

Bloomberg Businessweek (North America) - - Technology -

which can ac­count for as much as 40 per­cent of the price of an elec­tric ve­hi­cle in China, mod­els with NCM bat­ter­ies will have more trou­ble find­ing buy­ers. A Chi­nese shift away from NCM could mean a 10 per­cent drop in LG’S global bat­tery sales, says Lee DongWook, an an­a­lyst with HI In­vest­ment & Se­cu­ri­ties. Sam­sung should ex­pect a 15 per­cent over­all hit, says Kim Ji-san, an an­a­lyst with Ki­woom Se­cu­ri­ties. Pana­sonic is much less ex­posed, with less than 1 per­cent of its EV bat­tery sales com­ing from China, says Si­mon Yu, manag­ing di­rec­tor at SNE Re­search.

Push­ing lo­cal bat­tery pro­duc­ers to make their NCM de­signs safer should also help them be­come more com­pet­i­tive against for­eign com­pa­nies, says Mark Newman, a se­nior an­a­lyst with Bern­stein Re­search in Hong Kong. The sus­pen­sion of sub­si­dies “is very clearly a po­lit­i­cal step from China to give the do­mes­tic bat­tery mak­ers a chance to catch up,” Newman says.

The bat­tery sub­si­dies have al­ready be­come a diplo­matic is­sue be­tween China and South Korea, threat­en­ing to over­shadow the bi­lat­eral free-trade agree­ment the coun­tries im­ple­mented last year. On March 19, Korea’s trade min­istry said the Chi­nese gov­ern­ment has agreed to con­sider a re­quest to con­tinue sub­si­diz­ing NCM bat­ter­ies. Chun Taekmo, a chief fund man­ager of Hyundai In­vest­ments, says there’s rea­son to be­lieve China will re­lent, given how much more ef­fi­cient a well­made NCM bat­tery is, com­pared with its LFP coun­ter­part.

Even if China does re­new the sub­si­dies, Sam­sung and LG have good rea­son to worry that the gov­ern­ment may find other ways to pro­mote lo­cal ri­vals. While the bat­ter­ies of com­pa­nies such as BYD— No. 2 in global mar­ket share be­hind Pana­sonic— aren’t as ad­vanced, Chi­nese tech­nol­ogy com­pa­nies have proved they can quickly make up that kind of ground. “The Korean man­u­fac­tur­ers are very wary,” says I-chun Hsiao, an an­a­lyst with Bloomberg New En­ergy Finance in Tokyo. “What they are very afraid of is some­thing sim­i­lar to what hap­pened in the so­lar in­dus­try, when within two or three years the Chi­nese caught up and Ja­panese and Kore­ans have gone bank­rupt or lost mar­ket share.”

The bot­tom line China’s sus­pen­sion of sub­si­dies for Sam­sung and LG’S type of elec­tric-ve­hi­cle bat­ter­ies could mean dou­ble-digit sales drops.

$35.7b Ya­hoo’s value rose to above $47b in 2014 be­cause of its stake in Alibaba Ya­hoo!’ s mar­ket value on March 30, shortly af­ter the Wall Street Jour­nal re­ported that the com­pany has asked po­ten­tial buy­ers for bids on its core Web busi­nesses

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