Will LG Energy Solution and SK Innovation's Battery Business Take Off?…Focus on US Electric Vehicle Incentive Push

Additional Subsidies for Electric Vehicles Produced by UAW
GM, Ford, Stellantis Benefit... Tesla Disadvantaged
Extra Subsidies for Batteries Made in the U.S.
LG Energy Solution and SK Innovation Expected to Gain U.S. Market Share
House Ways and Means Committee Vote on 14th, Then Moves to Senate

[Asia Economy Reporter Yoonju Hwang] A green light has been turned on for LG Energy Solution and SK Innovation's battery business in the United States. They are being evaluated as the biggest beneficiary battery companies of the electric vehicle incentive plan for the Big Three automakers promoted by the U.S. Democratic Party.

According to the battery industry on the 13th, the U.S. House Ways and Means Committee will vote on the electric vehicle incentive plan on the 14th (local time). The core of the plan is to provide additional incentives for electric vehicles produced at factories where the United Auto Workers (UAW) union is present.

The main points include △a $7,500 subsidy for electric vehicles produced at UAW-affiliated factories △extension of the subsidy period for U.S.-produced electric vehicles to 10 years △an additional $4,500 subsidy for electric vehicles produced at UAW factories △an additional $500 benefit for electric vehicles using batteries manufactured in the U.S. (with more than 50% of parts and materials sourced domestically) △and the removal of the subsidy cap (200,000 units).

If this bill passes, it is expected to benefit the Big Three U.S. automakers?GM, Ford, and Stellantis?which have production plants affiliated with UAW, as well as battery companies with production systems in the U.S. Currently, there are only four battery companies located in the U.S.: LG Energy Solution, SK Innovation, Panasonic, and AESC. Among them, Panasonic supplies Tesla, which is not affiliated with UAW, so it is difficult for Panasonic to directly benefit from this bill. AESC is in a similar situation as its main client is Nissan.

On the other hand, LG Energy Solution has established a joint venture with GM called Ultium Cells and is constructing a 35GWh battery plant in Ohio, aiming to start operations in January 2022, so it can expect increased sales if the bill passes. SK Innovation also established BlueOvalSK with Ford and plans to build a 60GWh battery plant by 2025. Although the joint ventures have not yet disclosed whether they are UAW members, GM is reportedly discussing union membership recently.

Accordingly, LG Energy Solution and SK Innovation are expected to secure a more advantageous position in competition with Chinese companies in the global battery market. As of July this year (cumulative), the battery market share is CATL (30%), LG Energy Solution (24.2%), Panasonic (14.3%), BYD (7.3%), and SK Innovation (5.4%). Excluding the Chinese market, as of May this year (cumulative), the global battery market share is LG Energy Solution (35.55%), Panasonic (27.8%), Samsung SDI (10.1%), SK Innovation (9.7%), and CATL (9.6%). If their market share in the U.S. increases beyond the current level, it is expected to offset the relative disadvantage in the Chinese market.

A battery industry official said, "Domestic battery companies that have joint ventures with U.S. automakers can seize the opportunity to expand battery sales due to increased sales of Big Three electric vehicles in the U.S. If the bill passes, it seems favorable for SK Innovation, which is chasing LG Energy Solution and Panasonic in the battle for the top market share."

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