"K-Battery, Stable Expansion of Competitiveness in North America Until 2026"…IRA Public-Private Joint Meeting Held

Minister Anduk Geun of the Ministry of Trade, Industry and Energy is presiding over the "Public-Private Joint Meeting on the U.S. Inflation Reduction Act (IRA)" on the 8th at the JW Marriott Hotel in Gangnam-gu, Seoul, attended by related officials including Kim Dongmyeong, President of LG Energy Solution (Chairman of the Battery Industry Association), Lee Seokhee, CEO of SK On, Choi Yunho, CEO of Samsung SDI, Song Hojun, CEO of EcoPro, Hong Jeongjin, Executive Director of POSCO Future M, and Kang Namhun, Chairman of the Korea Automobile Manufacturers Association. Photo by Ministry of Trade, Industry and Energy

On the morning of the 8th, the Ministry of Trade, Industry and Energy held a 'Public-Private Joint Meeting on the U.S. Inflation Reduction Act (IRA)' at the JW Marriott Hotel in Seoul, chaired by Minister An Deok-geun, to discuss the impact of the final regulations and future response plans with the battery and complete vehicle industries.

This meeting followed the announcement on the 3rd (local time) by the U.S. Department of the Treasury and Department of Energy of the final regulations on the IRA's clean vehicle tax credit and the Foreign Entity of Concern (FEOC) guidance. From the private sector, attendees included Kim Dong-myung, President of LG Energy Solution and Chairman of the Battery Industry Association; Lee Seok-hee, CEO of SK On; Choi Yoon-ho, CEO of Samsung SDI; Song Ho-jun, CEO of EcoPro; Hong Jeong-jin, Executive Director of POSCO Future M; Nam Cheol, Vice President of LG Chem; Woo Jeong-yeop, Executive Director of Hyundai Motor Company; Park Tae-sung, Vice Chairman of the Battery Industry Association; and Kang Nam-hoon, Chairman of the Automobile Industry Association.

The battery and complete vehicle industries attending the meeting welcomed the two-year grace period granted for the application of the FEOC regulations on graphite and expressed their gratitude to the government for its close communication with the industry and active negotiations with the U.S. The FEOC regulation on graphite had been the greatest uncertainty factor in expanding the North American market for the domestic industry, which has a fragile graphite supply chain.

To receive up to $7,500 in IRA electric vehicle subsidies per vehicle in the North American market, battery parts must not be sourced from FEOC entities starting this year, and key minerals used in batteries must not be sourced from FEOC entities starting in 2025. The U.S. government, in the detailed regulations announced last December, effectively designated all companies located in China as FEOC.

Graphite is a key raw material for the anode in lithium-ion batteries, and in South Korea’s case, 97.7% of natural graphite and 94.3% of artificial graphite are imported from China. While domestic companies are diversifying supply chains for key minerals such as lithium and nickel, securing alternative sources for graphite in the short term has been difficult. If the FEOC regulations were applied, electric vehicles equipped with domestic batteries would not be eligible for U.S. clean vehicle subsidies starting next year.

The Ministry of Trade, Industry and Energy explained, "The government, at the inter-ministerial level including the Presidential Office, Ministry of Trade, Industry and Energy, and Ministry of Foreign Affairs, has actively negotiated with the U.S. side to request a grace period for the application of FEOC regulations on graphite." It added, "As a result, this request was reflected in the final regulations, enabling our industry to steadily expand its competitiveness in the U.S. market until 2026."

The final IRA guidance regulations also require the complete vehicle industry to submit plans for diversifying graphite supply chains after 2027. Additionally, they demand precise value-added calculations when determining the proportion of key minerals to meet tax credit requirements.

The government and industry will continue efforts to secure key minerals such as graphite in accordance with the final IRA guidance regulations to ensure the domestic battery industry maintains competitiveness in the U.S. market, while continuously monitoring and supplementing these efforts through the public-private joint Battery Alliance.

To support supply chain independence, the government plans to provide 9.7 trillion KRW in policy financing for domestic investment this year. Furthermore, through intergovernmental cooperation channels such as the Indo-Pacific Economic Framework (IPEF) and the Minerals Security Partnership (MSP), the government will support corporate activities to secure minerals from countries with which the U.S. has free trade agreements (FTAs). Development of alternative technologies such as lithium-metal batteries and silicon anode materials to replace graphite will also be supported.

Minister An Deok-geun stated, "Thanks to the efforts of the public and private sectors, we have gained a valuable two-year period," but added, "From a mid- to long-term perspective, diversifying and stably managing the supply chain of key minerals remains a critical task that our companies must achieve," and urged "close cooperation between our battery and automobile industries and the government throughout this process."

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