April 19, 2024

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[THE INVESTOR] The Chinese government is unlikely to offer subsidies to electric vehicles using Samsung and LG batteries from this year possibly in retaliation for South Korea’s recent decision to deploy a US-made missile defense system.

According to industry sources on Jan. 2, China excluded five EVs from the final subsidy list of 493 vehicle models publicized on Dec. 29, all of them powered by Korea-made batteries. 

The vehicles include four using LG Chem batteries -- Dongfeng Motor’s 4-ton electric truck, Shanghai GM’s Cadillac hybrid and Shanghai Automotive Industry Corp.’s two Roewe hybrid models -- and Shangxi Automobile Group’s 6-ton electric truck that is powered by Samsung SDI batteries.

China has hinted that Samsung and LG batteries could be excluded from the subsidy list due to their failure to gain government certifications. But about 50 models in the final list have been found to be using batteries of non-certified manufacturers.

The Chinese government has delayed certification for nickel-manganese-cobalt-oxide, or NMC batteries, that are produced by leading battery makers like Samsung and LG, while offering benefits to China’s less experienced battery makers that are still focusing on lithium-ion-phosphate, or LFP batteries.

The NCM manufacturing improves battery life and performance but requires more advanced packing and management systems. Most Chinese firms make LFP batteries for safety reasons.

“Both Samsung SDI and LG Chem are expected to adjust their battery production in China following the subsidy cuts,” an industry source said.

Samsung SDI and LG Chem established their own EV battery plants -- with annual production capacity of 100,000 and 150,000 units, respectively -- in China in 2015.

By Lee Ji-yoon (jylee@heraldcorp.com)