The Second CATL Is Coming

[Asia Economy Reporter Park So-yeon] There are criticisms that only the Korean government is standing idly by in protecting the future food source battery industry. Recently, reports have emerged that the American IT giant Apple will release an electric vehicle in 2024, intensifying the war over the electric vehicle and battery markets. Companies unrelated to the traditional automobile industry are also eyeing the emerging electric vehicle market. Behind this is the strategic support from various governments.

◇The Second CATL is Coming

China is a representative example. The Chinese government, using the THAAD incident as a pretext, provided biased subsidies to domestic companies to block market entry of Korean and Japanese companies that already have competitiveness in the battery industry. As a result, they nurtured CATL, the world's top company. Recently, China is fostering Parasis as the second CATL.

Parasis is the fifth largest battery manufacturer in China, which received investment from the German Daimler Group in July this year. Last year, its battery sales volume was about 2.27GW. Parasis recently decided to establish a 20GWh joint factory with Geely Tech Group.

Parasis is also preparing to enter the German market by forming a strategic partnership with Mercedes-Benz. It is investing about 600 million euros to build a battery factory in Bitterfeld-Wolfen, eastern Germany. At the end of 2018, it signed a battery supply contract with Daimler for 140GWh.

◇US Biden’s Eco-Friendly Policy, Expectations for Incentives and Subsidies

The United States is also preparing to foster the electric vehicle industry as the Biden administration pours out a series of eco-friendly policies. By 2030, 500,000 charging stations will be installed nationwide, and subsidies will be provided for battery technology development, manufacturing, and job creation.

After Biden won the presidential election, Ford reversed its previous stance of having no plans for battery production and opened up the possibility of investment. Especially, as the US, the world’s second-largest automobile market, is highly likely to introduce incentive systems to nurture its domestic industry, domestic companies are on edge.

Europe is also focusing on fostering the battery industry at the EU level with leading automobile companies to reduce the dependency on batteries from Korea, China, and Japan. Volkswagen is building a joint factory with the Swedish battery startup Northvolt and has also acquired shares in the Chinese battery company Guoxuan.

◇Korea’s Preempted Battery Market at Risk of Being Lost

Meanwhile, only the Korean government appears unusually complacent. While governments of other countries are locking doors and desperate to seize the battery market preempted by Korean companies, there are criticisms about the lack of policy support or diplomatic efforts. The government is standing idly by amid prolonged battery lawsuits among domestic companies.

The litigation costs incurred so far by LG Chem and SK Innovation are known to be between 400 billion and 500 billion KRW. This amount could build a factory capable of producing batteries to be installed in about 100,000 electric vehicles annually.

LG Chem and SK Innovation repeatedly state their principled position of sincerely engaging in the lawsuit while sharpening their stance. While the two companies are engaged in a wasteful emotional battle over the US market, Chinese and Japanese companies are steadily expanding their businesses in the US.

Panasonic has started developing next-generation batteries to be installed in Tesla electric vehicles. This battery, introduced by Tesla CEO Elon Musk at the Battery Day event, increases energy density by five times, output by six times, and driving range by 16% compared to existing batteries. Panasonic plans to establish a prototype production line at the Gigafactory Nevada, which it set up with Tesla in Nevada, USA.

CATL, which is building its first European factory in Erfurt, Germany, and preparing to enter Europe, is also considering building a factory in the US.

As the battery lawsuits among Korean battery companies drag on, concerns about battery supply instability are rising in the automobile industry, and alternatives are reportedly being considered. If the government does not act quickly, there are concerns that not only immediate battery supply opportunities but also nurturing opportunities for foreign companies will be lost, and furthermore, the future hegemony of electric vehicles will be threatened.

By April next year, it will be exactly two years since the two companies started their lawsuit. Too much time has passed and there have been several opportunities for the two companies to voluntarily narrow the gap. Voices are growing that the golden time for the government to play a role is running out.

This content was produced with the assistance of AI translation services.