South Korea’s Battery Giants Are in Hot Demand From US to Europe
(Bloomberg) -- South Korea’s biggest battery event of the year turned into a beauty parade of US, European and Australian officials all trying to lure investments to their regions.
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With LG Energy Solution Ltd., Samsung SDI Co. and SK On Co. among the 420 exhibitors at this week’s InterBattery conference, state and national representatives took the opportunity to engage in some heavy lobbying.
Eight US states — including Kentucky, Georgia, North Carolina, Tennessee and Indiana — delivered presentations on the benefits they can offer Korean firms as a base for new manufacturing plants, including low corporate tax, talented engineers, integrated logistics and supply chains, and cash incentives.
“We want to be the best cost, the best value, the best service, and the best return on your investment,” Jeff Noel, secretary of the Kentucky Cabinet for Economic Development, said in a presentation during the US EV Battery Forum seminar at the conference. “Just ask the folks at SK and Ford,” he said. Kentucky has attracted part of Ford Motor Co.’s $11 billion investment in new battery plants with SK On.
Korea’s three top battery makers hold around 20% of the global market, which is dominated by China’s CATL and BYD. LG Energy has about 10% of the market, followed by SK On at 5.6% and Samsung SDI with 4.2%, according to Seoul-based SNE Research.
However, President Joe Biden’s climate bill is pushing US carmakers to find reliable battery suppliers outside China to ensure their vehicles qualify for the maximum $7,500 subsidy, and Europe is following suit.
“Korean battery firms have secured almost 90% of new orders from US automakers recently,” Jang Young-Jin, Korea’s vice trade minister, said in his opening speech to the conference.
Officials from NAATBatt, a trade association for battery makers in North America, pushed Korean companies to invest more.
“Korean companies, especially equipment makers, are still trying to export products to the US rather than building a plant,” Fred Lee, co-chair of the OnShoring Technology Committee of NAATBatt said during a seminar at the conference. “But German companies are already coming to the US, and Japanese firms can do the same anytime.”
Firms from Korea need to act fast to compete, according to Lee. “Don’t hesitate” to invest, he said. “You should hurry.”
Among European countries, Hungary was eager to lure business from Korea. The Asian nation plowed 8.2 billion euros ($8.7 billion) into Hungary between 2014 and 2022, making it one of the Eastern European nation’s largest foreign investors. Samsung and SK On have battery plants in the country that supply automakers such as Volkswagen AG and BMW AG.
“We have a very competitive tax system, very good logistics to serve European markets and excellent education,” said Martina Almasi, director at the Hungarian Investment Promotion Agency, pointing out that Hungary’s corporate tax rate is just 9%, compared to around 25% in Korea.
State government officials from Australia, which has abundant reserves of key battery minerals such as lithium, talked up the benefits of their battery supply chains. Korean companies have been showing more interest in potential investment in critical mineral projects as they seek suppliers that enable them to comply with the US climate bill, according to Jessica Williams, an official from Australia’s Department of Industry, Science and Resources.
Australia is well positioned to attract investors from Korea and Japan as it has high governance standards that give the country a “commercial advantage,” Williams said. She also pointed out Australia has a free-trade agreement with the US, a key requirement for the EV subsidies in Biden’s climate bill.
Liesje Schreinemacher, the Netherlands’ trade minister, was also spotted at the LG Energy Solution booth on Wednesday. The previous day, she met with Korean trade minister Ahn Duk-geun where the pair signed seven memorandum of understandings in areas such as green mobility and renewable energy.
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