South Korea warns US subsidies risk ‘collapse’ due to China’s EV dominance
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China’s dominance over the global battery-grade and synthetic graphite markets, used in battery anodes, will make it difficult for electric vehicle (EV) manufacturers to qualify for subsidy schemes central to President Joe Biden’s green tech legislation, warns Ahn Duk-geun, South Korea’s Minister of Trade, Industry and Energy. Chinese firms control over 99% of the global market for battery-grade graphite and 69% of the market for synthetic graphite. Without exceptions for battery makers to source graphite from Chinese suppliers, Ahn claims no vehicles will qualify for the Biden administration’s tax credits for EV buyers.
China’s Graphite Dominance Hinders Biden’s Green Tech Legislation, Warns South Korea
China’s control over a vital battery material may hinder electric vehicle (EV) makers from benefiting from President Joe Biden’s key green tech policy, warns South Korea. This is due to the Inflation Reduction Act’s provisions, which aim to remove “foreign entities of concern”, including those closely tied to Beijing, from the US EV supply chain by January 1, 2025. Find out more about the Act here.
Chinese firms control over 99% of the global market for battery-grade graphite and 69% of the synthetic graphite market used in battery anodes. This dominance could render the Biden administration’s generous tax credits for EVs ineffective, according to South Korea’s trade minister, Ahn Duk-geun. He suggests that without exemptions for battery makers to secure graphite from Chinese suppliers, it’s possible that no vehicles will meet the qualifications for the subsidies.
Ahn warns that without exemptions or a transition period, the EV subsidy scheme could collapse. South Korean companies have already committed billions of dollars in investments in advanced tech facilities in the US to benefit from broad subsidies for semiconductor and battery manufacturing.
Last week, the US announced it would offer up to $6.4bn in federal subsidies to South Korean tech giant Samsung Electronics. The company plans a $40bn investment in its Texas facilities for cutting-edge logic chips, advanced packaging, and research and development on next-gen chip technologies. Memory chip maker SK Hynix is also building an advanced packaging facility in Indiana.
South Korean battery manufacturers LG Energy Solution, SK On, and Samsung SDI are expected to account for 44% of North America’s total battery capacity by 2030, according to Benchmark. However, future US administrations could cause problems for South Korean companies by altering elements of the IRA. Republican presidential candidate Donald Trump has threatened to gut the act and favor increased fossil fuel investment.
An official from the Korea Semiconductor Industry Association voiced concerns that the large investments by South Korean chipmakers in the US could jeopardize the country’s competitive edge. However, industry minister Ahn argues that the US’s “nationalistic industrial policies” and the reshaping of supply chains due to growing US-China tensions could benefit South Korea’s strength in trade diversification.
“When countries try to ‘de-risk’ from any specific country, they are going to need new partners. We are a perfect partner for countries trying to build their own fortress — that is our survival strategy,” said Ahn.
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