South Korean makers of electric-powered vehicle batteries are tapping China for promising opportunities in the country combating serious air pollution problems.
The EV market in China, the world's biggest auto market, is expected to grow to be the largest in the world by 2020, as its government has been pouring efforts into cleaning up its notoriously bad air.
The Chinese government has found part of the answer to the pollution problem in EVs.
China's Finance Ministry said on Feb. 8 that it will extend a subsidy program, set to expire next year, for EV buyers. The subsidies were designed to increase the number of EVs on the road to half a million by 2015 and to 5 million by 2020.
Among South Korean EV battery manufacturers, SK Innovation Co. has taken the lead in foraying into the neighboring market.
In July last year, the owner of South Korea's biggest refiner, SK Energy Co., finalized a deal to establish a joint venture named "Beijing BESK Technology" with China's state-run Beijing Automotive Industries Holding Co. and Beijing Electronics Holding Co., the world's fifth-largest LCD maker.
The joint venture started its operation last month on building a battery pack plant with a production capacity to power 10,000 EVs by the second half of this year. The plant will increase its production capacity to accommodate 20,000 EVs by 2017, according to
A battery pack is a set of any number of individual battery cells.
SK Innovation also launched SK Continental E-motion Pte., another EV battery joint venture set up with German autoparts maker Continental AG, in January 2013. Through such business tieups, SK Innovation aims to become a leading global EV battery provider.
At home, the company is working on increasing its production capacity at its two local EV battery plants. It plans to complete the expansion of its plant in Seosan, a western coastal city 151 kilometers of Seoul, to 300 megawatt hours (MWh) from the current 200 MWh by no later than the first half of the year. Another plant with a capacity of 10 MWh is being operated in Daejeon, 164 kilometers south of Seoul. A megawatt hour is equal to 1 million watts being used continuously for an hour.
Despite the aggressive drive, SK Innovation does not tally profits or losses in the EV battery sector.
"We have yet to make public our performances in the EV battery sector, as the EV battery industry is still in its infancy," Jeong Yong-jun, a spokeperson for SK Innovation, told Yonhap News Agency by phone.
Samsung SDI, another local EV battery maker, is close behind SK Innovation in the race to China.
In mid-January, Samsung SDI signed a preliminary deal with Anqing Ring New Group and Shanxi Province in northern China to open a joint venture by April. They plan to start the construction and operation of an EV battery plant next year and together invest a combined $600 million over the next five years.
Samsung SDI said the latest move will allow the company to take a bigger slice of China's EV battery market. The company has been expanding its global presence by supplying batteries to BMW AG's i3 electric car and Chrysler's F500e models.
LG Chem Ltd., which currently dominates the local EV battery market, is behind its smaller rivals in reaching China but is mulling a belated entry.
"We are considering building a plant for electric vehicle batteries in China, but details have yet to be decided," an LG Chem official said by phone, requesting anonymity. "The location of the plant will depend on with whom we sign a deal to provide batteries."
LG Chem has been supplying lithium-ion polymer batteries to Chang'an Automobile Group, China's third-largest carmaker, since late 2010.
LG Chem has a battery plant in Nanjing, which produces the small-size rechargeable types for mobile phones, but none for EVs.
The company has been producing EV batteries in its Ochang plant in South Korea and its Michigan plant in the United States. (Yonhap)