South Korean battery manufacturers did not receive subsidies from the Chinese government, possibly due to THAAD

According to businesskorea, LG Chem and Samsung SDI have once again failed to obtain subsidies for electric vehicle (EV) batteries from the Chinese government. This situation has continued for three years since the deployment of THAAD in South Korea in 2016. Instead, Chinese electric vehicles and EV batteries have received subsidies in South Korea.

China's Ministry of Industry and Information Technology recently decided not to provide subsidies for electric vehicles equipped with batteries from South Korean companies. As a step before subsidies, Dongfeng Renault and Chongqing Jinkang received type approval last month. The subsidy for each vehicle is about 10 million won, and it is almost impossible for unsubsidized vehicles to compete in the local market. In May 2018, Beijing Benz electric vehicles equipped with SK Innovation batteries received type approval, but have not received subsidies to date.

The Chinese government has never explained why, but experts point out that its intention is to use the THAAD deployment to protect China's electric vehicle and electric battery industries.

Before the deployment of THAAD, LG Chem supplied EV batteries to Great Wall Motors, SAIC Motor, FAW Group and Changan Automobile, while Samsung SDI supplied EV batteries to Yutong, Foton and JAC. Korean companies have also established battery manufacturing plants in China to supply batteries. However, their local EV battery sales have declined since the deployment.

However, Chinese companies are still enjoying subsidies in the Korean market. According to the Korea Automobile Manufacturers Association, 40.4% of the total subsidies for electric vehicle sales went to Chinese companies last year. Against this backdrop, BYD, the world's largest electric vehicle company, is planning to enter the Korean electric vehicle parts market.