[Source: LG Energy Solution Ltd.]
Battery maker LG Energy Solution and rechargeable materials producer POSCO Chemical will be the biggest beneficiaries as South Korean entities from the U.S. Inflation Reduction Act that passed the Senate to call for greater subsidies for electric vehicle (EV) purchases.
The U.S. Senate passed the Inflation Reduction Act, the country’s most ambitious climate spending package to date, on Sunday. The Inflation Reduction Act earmarks $469 billion for climate action and energy security to reduce greenhouse gases by 40 percent by 2030.
The bill provides buyers of electric cars assembled in North America with a $7,500 electric vehicle tax credit starting January next year. In addition to the requirement that the cars must be assembled in North America, there are other strict conditions that need to be met for the benefit.
Core materials of EV batteries such as lithium, nickel, and cobalt must come from the U.S. or a country with a free trade agreement (FTA) with the U.S., and at least 50 percent of the battery`s key components such as cathode materials, anode materials, electrolytes, and separators must be manufactured in North America.
LG Energy Solution"s EV battery plant in Holland, Michigan. [Source: LG Energy Solution Ltd.]
LG Energy Solution operates an EV battery plant in Holland, Michigan and has pledged 1.7 trillion won ($1.2 billion) to build a cylindrical battery plant in Arizona.
LG Energy Solution is also planning to produce pouch-type batteries at its Ohio plant during the second half of the year.
Once its joint EV battery plant in Canada with Stellantis is completed, its production capacity in North America is expected to surge from 140 GWh at end of last year to 520 GWh by 2025.
“The new tax credit is a huge improvement from the previous tax credit which had a cap of 200,000 cars per manufacturer” said an industry insider. The demand for LG Energy Solution EV batteries produced in the U.S. can rise not only from American car companies, but also European and Japanese automakers that seek to provide their customers with the tax benefit, the official added.
[Source: POSCO Chemical]
POSCO Chemical, which produces cathode and anode materials for EV batteries, can also enjoy the boon. The company has been aiming to establish its own supply chain from mineral to raw material to secondary battery intermediary material and as well as the material of the final stage to reduce reliance on China and to source minerals responsibly. PMC Tech, a subsidiary of POSCO Chemical, produces needle coke, the main raw material of artificial graphite anode.
Shares of LG Energy Solution fell 0.87 percent to 453,500 won while shares of POSCO Chemical gained 0.99 percent to 153.000 won during Wednesday morning trade finishing 2.35 percent and 5.57 percent respectively higher on the previous day.
By Kim Je-gwan, Kang Min-woo, and Susan Lee
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