The South Korean government is joining forces with its leading battery companies to together invest 20 trillion won ($15.1 billion) over the next seven years in advanced battery technologies.
South Korea is home to three of the world’s five biggest electric vehicle (EV) battery makers – LG Energy Solution Ltd (LGES), Samsung SDI Co Ltd and SK On.
The trio collectively control more than a quarter of the global EV battery market and supply major automakers including Tesla Inc, Volkswagen AG, General Motors Co and Ford Motor Co.
“The joint investment will allow South Korea to start commercial production of solid state batteries ahead of others,” Seoul’s industry ministry said in a statement on Thursday.
The ministry said the three battery firms will build pilot production plants in South Korea that will serve as their product and manufacturing innovation centres.
The plants will be used to test and manufacture advanced products such as solid state batteries, cylindrical 4680 cell batteries and cobalt-free batteries before launching mass production from their overseas production sites.
EV battery makers are racing to develop new battery technologies that promise longer driving range, higher energy density and better safety than the conventional lithium-ion batteries.
Chinese battery giant CATL unveiled on Wednesday a condensed matter battery that it hopes to start mass production of later this year to power EVs.
US EV Tax Rules
The world’s top battery maker said last month it was finding it difficult to come up with a technologically feasible and competitive product based on solid state batteries, a technology that is also being researched by Japan’s Toyota Motor Corp and Germany’s Volkswagen.
The industry ministry said South Korea aimed to quadruple domestic production capacity of cathode materials and triple exports of battery production-related equipment with the investment.
The plan comes after the government earlier this month announced a 7 trillion won financial support plan for domestic battery makers seeking to invest in infrastructure in North America to help them cope with the US Inflation Reduction Act.
Earlier this month, the US Treasury Department unveiled stricter EV tax rules, aimed at weaning the United States off a dependence on China for EV supply chains.
Nearly 80% of EVs that are eligible for US federal tax credits use batteries from South Korea’s three major cell makers, according to an analysis from brokerage Korea Investment & Securities.
- Reuters with additional editing by Sean O’Meara