South Korean electric vehicle (EV) battery makers mull phase-out from China that has been fickle in economic policy for political purpose, imposing unexplainably detrimental business actions on Korean enterprises following Seoul’s military decision to install a U.S. antimissile system for better deterrence against North Korean nuclear missiles.

LG Chem Ltd., Samsung SDI Co. and SK Innovation Co. -- South Korea’s leading manufacturers of EV batteries - have been outright discriminated from a series of actions excluding the Korean batteries powering existing EV vehicles as well as in new licenses for eligibility in receiving government subsidies essential to keep EVs in affordable price range.

“The subsidy to EV batteries is critical to doing business in China, and Korean manufacturers believe it will be challenging to reverse the current hostility against Korea,” said an industry source.

China is the world’s largest EV market, but uncertainties in policies have made investment in the country risky, he said.

Another negative factor is a possible supply glut that could be caused by aggressive facility expansion by Chinese rivals.

In response, LG Chem and Samsung SDI plans to sell the supplies made in their factories in China elsewhere. They built plants in Poland and Hungary, respectively, last year.

LG Chem will reinforce its marketing to secure new leads from European finished carmakers through its Polish plant to be completed late this year. In its recent conference call, LG Chem said its EV battery sales could grow by more than 30 percent from 1.2 trillion won ($994.1 million) despite adverse conditions in China.

Samsung SDI has invested 400 billion won in transforming a household appliance plant in Budapest, Hungary into a battery plant. The construction is scheduled to be completed by 2018.

SK Innovation dropped the plan to establish a joint venture in China and instead decided to expand its production facilities in Korea. Under a sudden new guideline, battery makers that have run factories in China for at least a year are eligible for EV subsidy. LG and Samsung both failed to get the license as they have built plants less than a year ago. SK does not have a production base in China.

By Chung Wook, and Kim Dong-eun

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