Chinese firms control the global battery-materials supply chain and are the key suppliers of EV cells to LG Energy, Samsung SDI, and SK On.
The Chinese — and Korean — firms are looking to take advantage of Korea’s free-trade agreement with the US, considering batteries made in South Korea and then installed in US-made electric cars will likely qualify for tax breaks under President Joe Biden’s Inflation Reduction Act. You Sang-yul, head of Ronbay’s Korean branch, said separately in an interview that “South Korea has a lot of talent and knowledge about batteries. Choosing Korea is part of our global strategy because of the IRA.”
The administration is currently drafting rules that would govern how much content to allow from any ‘foreign entity of concern’. That’s government-speak for businesses or groups owned or controlled by geopolitical foes of the US like China and Russia. In addition to Ronbay New Energy, SK On announced a joint venture with a Chinese firm in March to build a precursor factory, while Zhejiang Huayou Cobalt Co agreed to joint ventures with a chemical subsidiary of LG Group and Posco Future M Co earlier this year.
To assuage such concerns, LG said on an earnings call in April that it would be prepared to buy out the joint venture stake from Huayou Cobalt should that happen.