In a strategic move to fortify its standing in the fiercely competitive global battery market, South Korea has announced an ambitious plan to provide USD 29 billion in financing over the next five years. The initiative aims to enhance the capabilities of the country’s battery industry and reduce dependence on foreign sources.
Current market dominance
South Korean battery giants, including LG Energy Solution, Samsung SDI, and SK On (a unit of SK Innovation), currently command a formidable 49% share of the global battery market, excluding China. However, the joint statement from multiple ministries highlights the industry’s vulnerability due to reliance on foreign countries for crucial materials, underscoring the need for diversification.
Strategic tax incentives and loan support
To promote self-sufficiency, South Korea’s plan involves providing tax incentives and loans to domestic companies investing overseas. This will help secure mining rights for essential minerals and other battery materials. The strategy also includes intensified financial support, such as loans, guarantees, and insurance from institutions like the Export-Import Bank of Korea. The support extends to firms investing in North America to meet the conditions for tax allowances under the U.S. Inflation Reduction Act (IRA).
Focus on material refinement and reuse
Acknowledging the significance of key materials, the government plans to strengthen support for companies involved in refining and reusing minerals. This move aligns with the broader objective of reducing dependence on foreign sources and establishing a more resilient and sustainable battery supply chain.
Long-term competitiveness goals
While South Korean battery firms have adjusted their 2024 sales projections due to a slowdown in electric vehicle sales, the announced measures focus on ensuring the country’s battery industry remains globally competitive in the long run. The strategic vision seeks to propel South Korea’s secondary battery industry to the pinnacle of global competitiveness.
Navigating challenges for future growth
The battery industry faces challenges, including rising auto financing costs affecting electric vehicle sales. However, South Korea’s proactive measures aim to navigate short-term obstacles and position the country as a powerhouse in battery technology, fostering innovation and long-term growth.
South Korea’s comprehensive plan reflects a commitment to maintaining its leadership in the battery industry. The strategic allocation of significant funds and incentives underscores the nation’s determination to secure a robust and self-sufficient battery ecosystem for the future.