Beijing authorities upped isolation campaign against two South Korean battery majors LG Chem and Samsung SDI by dropping electric vehicles powered by their batteries off the list of 493 vehicle models eligible for Chinese government subsidies for clean fuel.

In the fifth list of China-made car models eligible for government subsidy that helps to bring down the prices of still-expensive EVs by 40 percent released by China’s Ministry of Industry and Information Technology (MIIT) on December 29, none are powered by battery packs of the two Korean makers. Four vehicles including a truck model of Dongfeng Motor Corp. and Cadillac plug-in hybrid sedan made in China that were on the list up until morning were dropped by the time of announcement.

The move is another devastating blow in a series of Beijing actions to curb increasing influence of the two Korean battery makers that control a third of the global EV battery market after they built manufacturing facilities in China. Beijing since early last year has amended regulations several times to disfavor the two makers and instead benefit local players that lag behind foreign names in price and technology competitiveness despite the government’s ambitious program to promote EVs. In January, the MIIT suspended EV buses using a certain type of materials including manganese (NCM), an area Samsung SDI and LG Chem are strong.

Then in June, the MIIT excluded the two manufacturers in the list of licensed battery suppliers for government subsidy on EV purchases from as early as 2018, claiming they did not meet revised standards for EV batteries - a move that has made Chinese automakers look for replacements to keep their cars affordable.

The two Korean companies that failed to get on the cut for licensed suppliers because they have been running local production lines from October whereas the new regulation requires production activity in China for at least a year had been waiting to reapply but were kept in the limbo because Beijing refused to receive any more applicants.

The exclusion in the cars already equipped with Korean batteries would further discourage Chinese carmakers from choosing Korean products.

Beijing has been increasingly using economic muscle against Korean enterprises following Seoul’s decision to deploy U.S. antimissile system in Korea, disallowing charter flights to Korea ahead of the Lunar New Year’s long holiday season and probing Lotte business operations in China as well as banning airing of Korean TV programs.

By Park Man-won and Kim Dong-eun

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