▶주메뉴 바로가기

▶본문 바로가기

The Korea Herald
검색폼

THE INVESTOR
March 30, 2024

Industrials

LG Chem CEO downplays impact of China’s EV subsidy cuts

  • PUBLISHED :April 03, 2017 - 16:57
  • UPDATED :April 03, 2017 - 16:57
  • 폰트작게
  • 폰트크게
  • facebook
  • sms
  • print

[THE INVESTOR] LG Chem CEO Park Jin-soo on March 31 downplayed the impact of the Chinese government’s subsidy cuts for electric vehicles using Korea-made batteries, expecting almost 30 percent growth in overall battery sales this year.

“There is no serious impact, with no canceled orders,” he told reporters at the company’s research complex in Daejeon, some 150 kilometers south of Seoul. 


LG Chem CEO Park Jin-soo (center)



Following the subsidy cuts from this year, the Korean battery maker has failed to secure any orders in China, the world’ largest EV market that offers generous cash incentives for EV purchase. Its local plant that was set up last year has also been reducing production, with the operation ratio standing at about 50-70 percent.

In order to offset the losses, the CEO said that the company plans to beef up production of batteries for energy storage systems and export them to other markets.

‘We are facing some difficulties in selling EV batteries locally. But we have already secured orders with some 30 carmakers globally,” he said, dismissing concerns over reduced profitability.

“We expect about 25-30 percent growth in battery sales this year.”

Park stressed the Chinese woes could be handled in the longer term, considering China will be eliminating EV subsidies by 2020 when all the players in the market compete in the same conditions.

“After all, the only solution will be developing technologies that rivals cannot catch up,” he added.

China has cut subsidies for EVs that use batteries from Korean makers, including LG Chem, Samsung SDI and SK Innovation, citing safety issues. Considering their technological prowess, industry watchers say, the decision is more politically intended as part of the Chinese government’s economic retaliation against Korea’s deployment of the US-made THAAD missile system.

Operating losses seem to be unavoidable as they have to pay more logistics costs to export China-made batteries to other markets. Companies are expected to export mostly ESS batteries as they operate local plants for EV batteries to benefit local incentives.

LG Chem operates EV battery plants in Korea, China and the US, with a new one in Europe under construction in Poland.

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

EDITOR'S PICKS