Stimulated by demand for electric vehicles and policies, South Korea's exports of battery cathode materials to the United States tripled

According to foreign media reports, data released by the Korea Trade Association on August 7 showed that from January to July this year, South Korea’s secondary battery core cathode material exports to the United States reached US$1.83 billion, a surge of 177.8% from US$661 million in the same period last year.

It is reported that the cathode material is one of the four components of lithium-ion batteries, and the other three are the negative electrode, separator, and electrolyte. Cathode materials determine the power of electric vehicle batteries and account for about 40% of battery production costs.

Data shows that South Korea’s cathode material exports to the United States were only US$9 million at the beginning of 2021, and increased more than six times to US$57 million by the beginning of 2022; in May of the same year, monthly exports exceeded US$100 million, and first began in January this year. It broke the US$200 million mark and set a new historical record with US$326 million in March.

Analysts believe that the growth of South Korea’s cathode material exports to the United States is mainly due to the increase in demand for electric vehicle batteries in the United States and the enactment of the Inflation Reduction Act (IRA), which stipulates that the purchase of electric vehicles assembled in North America can receive up to US$7,500. tax relief.

Image source: LG New Energy

Under the IRA, eligible electric vehicle batteries must have a certain percentage of minerals mined or processed in the United States or in a country or region with a free trade agreement with the United States. While the positive and negative active materials come in powder form, the IRA classifies them as "component materials" rather than "components," meaning Korean companies can produce them in domestic factories and ship them to the United States and manufacture battery parts in North America. .

South Korean battery manufacturers have been actively forming partnerships with electric vehicle manufacturers to meet IRA requirements.

For example, LG New Energy has a joint venture with General Motors and operates or is building battery manufacturing facilities in Ohio, Tennessee and Michigan; while battery company SK On has two factories in Georgia and is working with Ford Motor Company in Kentucky. Samsung SDI is partnering with Stellantis to build two battery factories in the United States.