Government and battery manufacturers collaborate to combat decline in electric vehicle sales
The Ministry of Trade, Industry, and Energy in South Korea has partnered with battery manufacturing companies to address the challenges arising from the declining demand for electric vehicles. A task force has been established to tackle these issues, with key industry players participating in strategic discussions to enhance competitiveness and address global supply chain concerns related to crucial minerals like lithium and nickel. The aim is to explore government support initiatives for companies in the eco-friendly vehicle and rechargeable battery sectors, which are facing uncertainties due to a prolonged slump in electric vehicle sales.
With the potential obstacles of industrial stagnation and potential protectionist trade policies under the second Donald Trump administration looming, industry insiders are advocating for increased financial incentives from the South Korean government. They highlight the disparity between government subsidies and the substantial investments made by Korean battery manufacturers into research and development. For instance, LG Energy Solution, Samsung SDI, and SK On collectively allocated $2 billion for R&D from January to September the previous year, showcasing a 10.7 percent increase from 2023.
Comparing the subsidies received by Korean companies to those provided to industry giants in China, the gap becomes evident. For example, CATL, the leading battery manufacturer globally, disclosed receiving $692.9 million from the Chinese government in contrast to the comparatively lower funding secured by Korean companies from their government sources. This discrepancy underscores the need for greater state funding to bolster the industry’s growth and innovation capabilities.
While the South Korean government is cautious about allocating substantial sums to major corporations considering their investment capacity, the necessity for enhanced financial support to compete globally, as seen in China, cannot be overlooked. The asymmetry in state funding highlights the imperative for the Korean government to reassess its subsidy programs and allocate resources more equitably to ensure the sustainability and advancement of the local battery manufacturing industry. By fostering a supportive environment through enhanced financial backing, the government can enable Korean companies to stay competitive in the global market and drive innovation in the electric vehicle sector.
