Biden Boosts Electric Vehicles... K-Battery Companies Gain Momentum

President Biden Signs Executive Order to Rejoin Paris Climate Agreement Immediately After Inauguration
Battery Demand Rises Alongside North American Electric Vehicle Market Expansion
LG Energy Solution and SK Innovation Expected to Benefit

[Asia Economy Reporter Hwang Yoon-joo] With U.S. President Joe Biden signing an executive order to rejoin the Paris Climate Agreement, the position of Korean battery (K-battery) companies within the United States is expected to strengthen. In particular, LG Energy Solution and SK Innovation, which have been establishing production bases and expanding investments in the U.S. due to the 'United States-Mexico-Canada Agreement (USMCA)' that came into effect in July last year, are anticipated to benefit.

According to KOTRA and the battery industry on the 25th, the proportion of internal combustion engine vehicles in North America is expected to decline from 91% in 2020, 90% in 2021, 88% in 2022, to 86% in 2023. The battery industry believes that the Biden administration, which recently launched efforts to expand the eco-friendly automobile industry, could cause the share of internal combustion engine vehicles to decrease at a faster pace than these projections.

Accordingly, the U.S. factories of LG Energy Solution and SK Innovation have attracted attention. Currently, there are only four electric vehicle battery factories in the U.S.: Panasonic, LG Energy Solution, SK Innovation, and AESC.

Among these, the battery companies capable of supporting the Biden administration's eco-friendly vehicle policies are virtually only Korean companies. The battery business requires large-scale capital and technological capabilities of at least 1 trillion won, limiting the number of companies that can enter the U.S. market. Chinese battery companies like AESC find it difficult to invest in the U.S. due to the lingering effects of the U.S.-China trade dispute, and Panasonic is taking a conservative stance on factory expansion.

Moreover, the battery factories of Panasonic, AESC, and LG Energy Solution in Ohio are limited to supplying batteries only to Tesla, Nissan, and GM. The battery factories that the Biden administration can utilize to grow the electric vehicle market are essentially only LG Energy Solution's Michigan factory and SK Innovation's Georgia factory.

An industry insider said, "The subsidies supported by the Biden administration for the transition to eco-friendly vehicles are likely to provide greater benefits to American-made cars," adding, "Considering Ford's situation, whose success in entering the electric vehicle market depends on the operation of LG Energy Solution and SK Innovation factories, which are establishing joint ventures with GM, the position of K-battery will grow even stronger in the U.S."

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