[THE INVESTOR] Samsung SDI is facing a setback in China as a local electric car maker has recently stopped producing vehicles using the Korean firm’s batteries following its failure to be qualified for government EV subsidies.

According to news reports on July 10, Anhui Jianghuai Automobile has suspended production of its iEV6s SUV equipped with Samsung SDI batteries on concerns it may be stuck with unsold stock if the model fails to get government subsidies.

The iEV6s is the carmaker’s most expensive EV model at 234,800 yuan (US$35,000). 

Even though the evaluation session is still ongoing, if Samsung SDI fails to make it to the final list of companies for government subsidies, consumers who purchase EVs using its batteries would not benefit from subsidies from 2018.

“We are cautious about selling iEV6s because of the huge policy risks,” said Wang Fanglong, a Jianghuai Auto executive in an interview with Bloomberg. “The policy may change any time.”

Korea’s top two battery makers Samsung SDI and LG Chem have failed to be included in a tentative list of some 30 companies subject to government subsidies for EVs. With two more evaluation sessions remaining, the companies have are concerned about their possible failure to be included in the list which could deal a harsh blow to them in the all-important Chinese market where it has poured resources to beef up EV battery production.

“We were informed about the production suspension last month from Jianghuai and havw stopped supplying batteries from end-June,” said a Samsung SDI official.

“But the carmaker agreed to resume production when we get the final approval.”

Samsung SDI has supplied 8 million battery cells, sufficient to power 1,800 vehicles, since November last year.

“It takes about two years to develop batteries for an EV model. It won’t be easy for the carmaker to change its supplier immediately,” the company official added.

By Lee Ji-yoon (jylee@heraldcorp.com)