EU’s stricter stance on Chinese batteries an opportunity for auto industry

2023.09.15 10:50:02 | 2023.09.15 13:04:49

SK Innovation’s second EV battery manufacturing plant operated by SK Battery Manufacturing in Komarom, Hungary. [Courtesy of SK Innovation]이미지 확대

SK Innovation’s second EV battery manufacturing plant operated by SK Battery Manufacturing in Komarom, Hungary. [Courtesy of SK Innovation]

The European Union’s tougher stance against Chinese battery producers could be an opportunity for the automotive industry in South Korea, according to forecasts. With the European Commission taking a stricter stance to limit China’s market dominance, Korean companies, which already have a solid foothold in Europe, are poised to see their share in battery production rise.

Following the enforcement of the Critical Raw Materials Act, the European Commission has recently launched an investigation on whether to impose additional tariffs on Chinese electric vehicle (EV) imports, which the authority says have benefited from subsidies. If the EU probe leads to an additional tariff of 10 to 15 percent, Chinese battery producers will face headwinds, as Chinese EVs are mostly equipped with domestic batteries.

But the situation looks favorable for Korean companies that have successfully ventured into Europe.

LG Energy Solution Ltd. and Samsung SDI Co. constructed new EV battery plants in Poland and Hungary respectively in 2017. LG Energy Solution has established partnerships with European automakers such as Volkswagen, while Samsung SDI has won European automotive customers such as BMW.

After its relatively late entry into Europe, SK on Co. built a battery production base in Hungary and plans to expand the current capacity of 17.5 gigawatt-hours (GWh) to 47.5 GWh by 2024.

“The EU’s latest probe appears to be targeting China, the sole importer heavily reliant on third-party sources for raw materials with a staggering dependency rate of 65 percent,” according to Ahn Jae-yong, the Korea Trade Investment Promotion Agency (KOTRA)‘s Brussels office.

A separate report published the same day said Korea has risen to become Europe’s third-largest non-European importer, the first time the country topped Japan and Russia in the rankings.

This report, released by the Korea International Trade Association on Thursday, said European Union imports from South Korea rose by 10.7 percent in the months from January to April this year compared with the same period of the previous year, although the bloc saw imports from non-EU countries drop by 8.6 percent over this period.

The report added the region’s top two import partners were China, with a total import value of $188.1 billion, and the United States, with imports amounting to $123.8 billion. Korea is in seventh place, with imports totaling $26.4 billion during the same period.

By Jung You-jung, Chung Seung-hwan, and Han Yubin

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