South Korea's Battery Industry Faces Challenges Amid U.S. Contract Cancellations
South Korea's battery industry is struggling after the cancellation of significant vehicle battery supply contracts in the U.S., leading to a decline in market share in Europe and jeopardizing access to tax credits. Trade Minister Kim Jeong-gwan met with major firms LG Energy Solution, SK On, and Samsung SDI to address the challenges posed by reduced electric vehicle subsidies and increasing competition from Chinese companies. The government is being urged to provide incentives and support for restructuring to enhance competitiveness amid high electricity costs and limited raw material access.
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South Korea's battery industry is facing significant challenges following the cancellation of vehicle battery supply contracts in the U.S. last month, valued in trillions of won. Trade Minister Kim Jeong-gwan met with LG Energy Solution, SK On, and Samsung SDI to discuss the sustainability of the current three-company structure.
The sector is experiencing declining demand due to reduced electric vehicle subsidies in the U.S. and Europe, leading to a drop in South Korean market share in Europe from 63.5% in 2022 to 48.8% in 2024, while Chinese companies gained share from 34% to 47.8%. Additionally, ongoing order cancellations in the U.S. jeopardize South Korean firms' access to tax credits.
Despite plans for 14 battery plants in the U.S. with a total capacity of 580 GWh, high electricity costs and limited raw material access hinder competitiveness. The government is urged to provide incentives and support for restructuring to avoid missing key opportunities in the industry.
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