South Korea’s leading battery manufacturers are calling on President Lee Jae-myung to introduce direct financial subsidies as they contend with slowing domestic electric vehicle demand and mounting competition from Chinese rivals.
In his inaugural address on May 29, Lee emphasized his commitment to “recharge” the national economy through support for K-batteries, pledging measures such as enhanced R&D for advanced technologies like all-solid-state batteries, tax incentives for domestic production, development of a “battery triangle belt” across Chungcheong, Yeongnam and Honam, expanded energy storage system deployment, and growth of the battery recycling sector.
Industry representatives welcome proposed tax breaks but are urging more flexible funding akin to the U.S. Advanced Manufacturing Production Credit under the Inflation Reduction Act. While Lee’s plan would grant companies facility investment and R&D tax credits of roughly 15 percent and 30 percent, those incentives apply only to firms reporting taxable profits.
In the first quarter, LG Energy Solution, Samsung SDI and SK On all posted operating losses—even after factoring in tax credit benefits—potentially excluding them from the relief. “Cash refunds would enable us to reinvest more aggressively, especially in the U.S. where rising auto and parts tariffs are weighing on EV growth,” said an industry source speaking anonymously.
Unlike China, which combines subsidies, direct funding and state-led R&D programs, Korea’s support has been limited to tax relief. Observers note that the Korean government traditionally avoids direct funding due to perceived risks and concerns over misallocation of taxpayer money. Proposals for alternative support include discounted utility rates for battery production facilities.
Meanwhile, Chinese battery makers continue to expand their global presence. According to SNE Research, Contemporary Amperex Technology Co. (CATL) and BYD held market shares of 38.1 percent and 17.3 percent, respectively, in the latest period. LG Energy Solution slipped from 12.3 percent to 10.2 percent, while SK On and Samsung SDI saw shares drop to 4.3 percent and 3.3 percent.
Source: The Korea Herald
