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South Korean manufacturers of electric vehicle batteries could benefit most from China’s sunset in subsidy policy on electric vehicles amid growing closures in the local industry due to poor quality.

Despite their edge in competitiveness, Korean EV batteries from Samsung SDI, LG Chem and SK Innovation had to suffer discriminations in the world’s biggest EV market in recent years as Beijing authority shunned them from subsidy program to promote local industry.

The Chinese government still aims to raise the proportion of EVs and hybrid cars across China to 25 percent by 2025. A chunk of Chinese battery makers that managed to survive on state subsidy are already mired in bankruptcy in fierce competition. According to statistics reported by Gasgoo.com (Chinese), the number of Chinese EV battery manufacturers came to 200 in 2016, but it was more than halved to 85 in 2018 and fell further to 69 in the first half of this year. Market watchers say that the Chinese EV battery industry is being restructured around strong players and only 20 companies will be left by 2020.

The market reshaping is related to the government’s subsidy abolition. The Chinese government has subsidized nearly half of the cost when consumers purchase an electric vehicle since 2012. The generous policy attracted the spawning of many Chinese battery makers. Their presence reached a peak in 2016, when subsidies for commercial electric buses equipped with Korean-made batteries were abolished, and the measure was extended to passenger EVs. But the situation was reversed as government subsidies gradually declined. The local government began grading subsidies based on battery capacity, which forced many weak companies to close business. As a result, only 10 local companies came to dominate 88 percent of the Chinese EV battery market in 2019.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]