K-Batteries Undermined by Cheap Chinese Materials… Calls for Government Support Grow
Calls Grow for Government Support as Korean Battery Makers Remain Heavily Dependent on Low-Cost Chinese Materials As South Korean battery manufacturers increasingly rely on low-cost Chinese materials, there is mounting demand for stronger government support. While domestic firms are pursuing a “China Plus One” strategy in response to U.S.-led pressure to reduce dependence on China, they face significant challenges—such as high switching costs, delivery uncertainties, and issues with product quality and specifications. Industry insiders warn that if the domestic materials industry weakens further, Korea could be left vulnerable to future price hikes from China without effective countermeasures. According to industry sources on the 7th, the combined global market share of Korea's three major battery makers—LG Energy Solution, Samsung SDI, and SK On—stood at only 18.4% last year. Meanwhile, the share of Korean-made materials in their supply chains continues to decline. In contrast, Chinese suppliers are expanding their market presence with highly competitive prices. Chinese anode materials are reportedly priced at just $3 to $4 per kilogram—less than half the cost of Korean alternatives. With strong government backing and large-scale production capabilities, Korean firms’ reliance on China is deepening. A report from the Korea International Trade Association (KITA) revealed that as of last year, around 70% of Korea’s battery material imports originated from China. Specifically, 72% of cathode materials and 68% of anode materials were sourced from China. Although Korean firms are trying to diversify their supply chains, they remain dependent on Chinese materials for the stable procurement of key components. LG Energy Solution, for example, revised its contract with China’s Shengzhou Riwan to increase its supply of LFP cathode materials from 160,000 tons over five years to 260,000 tons. The contract, worth more than KRW 2 trillion, is considered the largest of its kind in the global LFP cathode market to date. SK On also signed a deal in March with Dangsheng Technology to secure 17,000 tons of high- and mid-nickel cathode materials by 2027, worth approximately KRW 430 billion. Negotiations are underway for an additional 110,000 tons. Meanwhile, Samsung SDI signed a supply agreement with China’s Senior Technology for separators sufficient to produce batteries for 5 million electric vehicles. Industry players say strong government backing is crucial. China has established a solid battery ecosystem by offering subsidies only to electric vehicles and batteries made with domestically sourced materials. Combined with lower electricity and labor costs, China continues to dominate the cost competition. The South Korean government is also stepping up support to bolster battery industry competitiveness. In March, it announced a plan to provide up to KRW 1 trillion in financial aid to companies that purchase key secondary battery materials—such as separators and electrolytes—from domestic suppliers. However, despite recent improvements in first-quarter results among materials companies, uncertainties remain over whether they can sustain growth—especially as major battery makers are still posting operating losses. Given the volatility of market conditions and policy directions, many argue that additional, practical support measures are urgently needed. An industry insider commented, “Most battery components and materials are imported, so the actual benefits to domestic production are limited. It’s difficult for companies alone to compete with China's pricing power, so the government needs to step in with real solutions—such as tax incentives and direct rebate programs.” ChatGPT를 사용하여 번역한 기사입니다.
