April 25, 2024

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[THE INVESTOR] SK Innovation has suspended operations at its electric vehicle battery plant in China since early this year due to subsidy cuts and reduced orders, the company confirmed on March 29.

The Beijing BESK Technology plant, established in 2013, is a tripartite joint venture with two Chinese partners -- Beijing Electronics Holding and Beijing Automotive Industry Holding Co. SK Innovation is the second-largest shareholder with a 40 percent stake, while Beijing Electronics holds 41 percent and the remaining 19 percent is held by BAIC. 

SK Innovation's EV battery plant in China

Related:
Samsung SDI suspends expansion plans for Chinese battery plant


“The production halt was decided by Chinese partners,” a company official was quoted as saying by Maeil Business News. “Battery cells produced at the Korean plant will be sold to other clients. We expect no business impact.”

The Chinese government has decided not to offer cash benefits for consumers who purchase EVs powered by Korea-made batteries from this year, citing safety issues. Industry watchers predict Korean battery makers will not benefit from government subsidies until 2020 at least.

The top two Korean battery makers -- LG Chem and Samsung SDI -- have already adjusted their production plants at their local plants that have been mostly idle for months. But considering the participation of Chinese partners, SK Innovation had expected to have less impact from the overt hostility of Chinese authorities toward Korean businesses.

The company downplayed the possibility that China’s retaliatory actions against South Korea’s deployment of the THAAD missile system could have affected the production halt, saying it is a bigger loss for the Chinese partners.

The plant assembles battery cells produced at the company’s Korean plant. Its annual revenue is estimated at about 50 billion won (US$44.73 million) to 60 billion won.

By Alex Lee (alexlee@heraldcorp.com)