Chinese battery material companies have significantly increased their investment in Korean battery companies this year. U.S. media pointed out that China is using Korea as a channel to bypass U.S. supply chain reorganization.
Bloomberg reported on the 30th (local time) that “Chinese companies are investing in the battery industry in Korea to make Korea’s battery industry a gateway to the U.S. market,” adding, “This could undermine the Joe Biden administration’s efforts to block China’s influence on the electric vehicle supply chain.”
In the past four months, Chinese companies and their Korean partners have announced the construction of five electric vehicle battery plants in the country, according to the news agency. It is worth about $4 billion.
The Biden administration provides tax benefits of up to $7,500 only if electric vehicles sold in the U.S. through the IRA are equipped with batteries that use more than 40% of parts and materials produced in the U.S. or countries with free trade agreements with the U.S. This is intended to reduce dependence on China, which exerts a strong influence in the battery materials sector.
The Biden administration is currently targeting China and making rules on how many parts or materials electric vehicle companies can receive from “concerned foreign organizations.” “We will continue to evaluate and respond to national security issues related to international and domestic supply chains,” Treasury Department spokesman Ashley Shapittle said.
However, there is also a view that the Korea-China partnership will inevitably continue. This is because even if the Biden administration tries to exclude Chinese companies from the supply chain, U.S. automakers are lobbying to allow them to use some Chinese parts or materials.
Earlier, as Chinese battery company CATL established a joint venture with a technology partnership, not an equity investment, criticism was raised that it was a “byway” to receive IRA subsidies.
