Key facts
- Experts are urging the EU to collaborate with South Korean battery manufacturers to reduce reliance on Chinese companies.
- China dominates the global EV battery market, controlling 80% of cell production and 94% of LFP battery production.
- South Korean firms LG Energy Solution, SK On, and Samsung SDI are key players with significant manufacturing capacity in Europe.
- The EU's new Industrial Accelerator Act (IAA) aims to boost domestic manufacturing and could favor Korean companies over Chinese ones.
- Korean battery makers have seen their European market share decrease due to the popularity of Chinese-made LFP batteries.
Experts are urging the European Union to deepen its industrial cooperation with South Korean battery manufacturers to counter China's overwhelming dominance in the electric vehicle (EV) battery market. South Korea's leading companies, LG Energy Solution, SK On, and Samsung SDI, possess significant global market share and a substantial existing manufacturing footprint within Europe, making them strategic partners for the EU's decarbonization goals.
China currently dominates the entire battery supply chain, producing 80% of global battery cells and a staggering 94% of increasingly popular lithium-iron-phosphate (LFP) batteries. This concentration creates a strategic vulnerability for Europe, which is heavily reliant on Chinese imports, with a mere 1.3% tariff on all imported batteries allowing cheaper Chinese products to undercut local production.
While European EVs using LFP batteries have seen a rise in adoption, nearly all are supplied by China. South Korean manufacturers, historically focused on more expensive nickel-manganese-cobalt (NMC) chemistries, are now shifting towards LFP, with LG Energy Solution already shipping LFP cells for energy storage systems from its Wrocław plant. However, Chinese companies like CATL are also expanding their presence in Europe, with plans for new facilities.
The EU's new Industrial Accelerator Act (IAA) aims to bolster domestic manufacturing and reduce reliance on China. This policy, influenced by the 'Draghi Report,' prioritizes 'Made in Europe' products and could benefit Korean companies. While countries with Free Trade Agreements (FTAs) with the EU, like South Korea, may qualify under origin rules, the IAA also imposes local production requirements. This effectively creates barriers for Chinese companies, which do not have an FTA with the EU and hold over 40% global market share in key sectors, potentially allowing Korean firms to regain market share lost to cheaper Chinese imports.