By Heekyong Yang and Yilei Sun
SEOUL/BEIJING (Reuters) – For automotive battery makers LG Chem Ltd (KS:051910) and Samsung (KS:005930) SDI Co Ltd (KS:006400), the Chinese market has begun to offer promise after painful loss-making investments.
The reason for their hardship: a government list of recommended battery suppliers published three years ago that became linked to generous car subsidies and did not include foreign firms. Since then, Chinese rivals led by Contemporary Amperex Technology (CATL) (SZ:300750) and BYD Co Ltd (SZ:002594) (HK:1211) have virtually locked up the world’s biggest market for electric vehicle batteries.
But signs that China is starting to open its car battery market are spurring the South Koreans to invest further despite having had to repurpose existing Chinese production for exports.
LG Chem said in July it will spend about 2 trillion won ($1.8 billion) on a second China car battery plant with production slated to begin in October 2019, while SK InnovationCo Ltd (KS:096770) plans to invest 400 billion won in a China plant that would build key parts of EV batteries.
Samsung SDI has said it may expand China battery capacity and Executive Vice President Michael Son has noted the company is preparing for a gradual change in what he called China’s ‘protectionist policy’.
“We are in active consultations with several Chinese automakers,” he told an earnings conference call in October.