�Bruce Einhorn and Heejin Kim

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.

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