Authorities from the Korean Ministry of Commerce met with Hyundai Motor, LG Energy Solution Ltd., Samsung SDI Co. and SK On Co. to hear their “worries and difficulties” on the measures that the United States includes in its tax and energy project, the Ministry said in a statement on Thursday. Chief among them is the need to assemble electric vehicles in North America and quickly end dependence on China in terms of the battery supply chain in order for the vehicles to qualify for a maximum tax credit of $7,500.
The concerns, along with a request for tax credit requirements to be eased, were relayed to the US Trade Representative, along with a warning that the measures could violate the US-China free trade agreement. and Korea and World Trade Organization rules, a Commerce Ministry spokesman said on Friday.
South Korean battery makers source most of their materials from China, and finding new sources could be difficult amid surging demand and tight supply. Meanwhile, all electric vehicles Hyundai currently sells in the US and Europe are made in Korea. The automaker plans to open its first US plant in Georgia in 2025.
Korean battery makers hold about 30% of the world market and supply automakers such as Tesla Inc., General Motors Co., Ford Motor Co., and Rivian Automotive Inc.
Companies are awaiting further details on the US rules, and some are already looking to diversify their suppliers outside of China, according to people from Korea’s Big Four cell and materials makers, who asked not to be identified because of the sensitivity of the issue.
South Korean battery manufacturers, which use products such as nickel, cobalt, manganese or aluminum, imported more than 80% of China’s key minerals in 2020, according to the Korea Institute of Industrial Economy and Trade. . Japan also imported 80% of its lithium hydroxide and 96% of its manganese from China to make batteries, the institute said.