[THE INVESTOR] Samsung SDI and LG Chem, the nation’s top two battery makers, are preparing to get battery certifications from China later this month, hoping the recent tensions between Korea and China will not affect the pending decision.
After four failed attempts over the past months, this is their fifth attempt to receive China’s state subsidies for electric vehicles using their batteries. A total of 56 firms, most of them Chinese, have thus far been certified for subsidies that take effect from 2018.
Samsung SDI's EV battery plant in Xian, China
The next round of evaluation is expected to be held later August or early September.
Chinese authorities have not revealed the reasons why Samsung and LG, which control almost one-third of the global EV battery market, have been excluded from the list. Industry watchers say they may have failed to meet the condition that they should have started producing batteries in China for more than a year.
Both firms started their Chinese production in June last year.
“We are confident in the upcoming fifth evaluation session,” said a Samsung SDI executive, predicting no direct impact from the South Korean government’s recent decision to deploy the US-made Terminal High Altitude Area Defense missiles next year.
Korea says THAAD will only be used defensively and is necessary to deter or defend against attacks from North Korea. But Chinese opposes the deployment as it says the radar can be used to spy across the borders into China.
EV subsidies are crucial for the two firms to expand capacity in the world’s largest car market. They have recently been beefing up battery production there, spending big to build plants.
“It is true that we saw weaker sales in China than planned but most of the market uncertainties will be removed in the latter half of this year,” the Samsung SDI executive said.
“There is clear demand for high quality batteries among Chinese clients. We are already talking with them about increasing orders in the coming months.”
In its earnings report on July 28, Samsung SDI posted an operating loss of 54.2 billion won (US$48.13 million) in the April-June period, which compared to 58.81 billion won loss a year ago.
By Lee Ji-yoon (firstname.lastname@example.org