South Korean battery giants slow down investment in the United States

Global Times comprehensive report: Under the attraction of policies such as the US Inflation Reduction Act, multiple South Korean battery companies have gone to the United States to invest in battery production capacity. According to Yonhap News Agency, LG Chem's battery material factory in Tennessee, USA started construction in December 2023 and is expected to officially start production in 2026. In April 2023, another South Korean battery giant, Samsung SDI, announced a joint venture with General Motors to build a new power battery factory and plans to achieve mass production in 2026. In 2023, Hyundai Motor Group and LG Energy Solutions decided to invest over $4.15 billion to establish a joint venture battery production plant in the United States, striving to start production as early as the end of 2025. Hyundai Motor Group also signed a cooperation agreement with SK on in South Korea in 2023, agreeing to establish a battery pack production plant in North America by 2025.

However, the investment plans of the aforementioned South Korean battery giants in the United States are slowing down. According to a report in South Korea's Digital Daily on March 1st, South Korean companies are considering how to respond as the US government may reduce subsidies to overseas companies in the future. Korean battery industry insiders have stated that LG Energy Solutions, SK on, and Samsung SDI, the three major Korean battery companies, are delaying their investment plans in North America.

According to reports, one of the main reasons why the three major battery companies in South Korea have postponed their investment plans in the United States is the sluggish demand for electric vehicles. Due to the stagnation of the popularity of electric vehicles in the US market, a slowdown in sales growth, coupled with high purchase and charging infrastructure prices, the attractiveness of electric vehicles to American consumers is decreasing. Affected by the aforementioned unfavorable factors, the investment cost burden of the South Korean battery industry is increasing. At present, the long-term dependence of the South Korean battery industry on aggressive investment plans to obtain external investment is beginning to encounter problems, and the funding chain of some companies is lighting up a red light.

At the same time, another important reason for stimulating large-scale investment in the United States by South Korean battery companies is that the Inflation Reduction Act has begun to cause distrust among South Korean companies. Korean media believe that the purpose of the United States introducing this policy is to revitalize its manufacturing industry and attract more investment. Due to battery companies benefiting billions of dollars from the bill, the joint venture American automakers are demanding restrictions on government subsidies for foreign battery companies. There are also voices from the South Korean industry that believe that if Trump is elected as the President of the United States in the future, the Inflation Reduction Act signed by Biden may be repealed. The South Korean battery industry needs to make significant strategic adjustments in terms of investment in the United States. (Ding Ling)

Source: Global Times