South Korea announces $7 billion to support EV battery supply chain

South Korea has announced 9.7 trillion won (more than $7 billion) in financial support for the Korean electric vehicle (EV) battery supply chain industry. This new supply chain aims to reshuffle resources to comply with US import regulations and become eligible for EV incentives.

The latest announcement from the South Korean government came after the US loosened some restrictions on battery material import to gain EV tax credit including graphite from China. This new decision will delay restrictions on graphite for the next two years.

Last year, the US banned battery material sourcing from countries including China and Russia. The new rules allow imports from countries that signed a free trade agreement with the US.

Graphite, an essential material for anode in batteries, is dominantly produced and refined in China. Therefore, South Korean battery makers heavily relied on graphite sourcing from Chinese partners. The dominance of China in the graphite supply chain is surreal and it is acknowledged by Hyundai Motor Group and international car companies including BMW, and Volkswagen.

Therefore, the Korean government has engaged in several rounds of discussion with the US counterparts to provide relief to find alternative material sourcing. Initial guidelines mandate that batteries must not include Chinese materials to receive a full $7,500 federal subsidy.

South Korea continues to see a surge in EV battery demand last year. The top three battery makers including LG Energy Solutions, Samsung SDI, and SK On reported more than 10 trillion won from battery sales in the US market. It is predicted that over 30 EVs could become eligible to tap full government subsidy by next year with the new changes.

Despite getting a suspension on current restrictions, the South Korean government has pledged to invest 9.7 trillion won in policy financing over the next two years. This investment will be used to secure essential minerals from nations with established free trade agreements with the US.

(source)