South Korea’s leading electric vehicle (EV) battery makers, LG Chem Ltd., Samsung SDI Co. and SK Innovation Co., are at risk of losing ground to their rivals in the world’s most rapidly growing EV market since China indefinitely delays issuance of new certification for EV batteries, a must to be eligible for the Chinese government’s subsidies for EVs.

According to industry sources on Sunday, the Chinese government has not officially fixed the date for the fifth certification issuance, which was originally expected in August. The Chinese government covers nearly half of the EV car price with a subsidy that ranges from 25,000 yuans ($3,725) to 55,000 yuans for cars powered purely by electricity, and it is expected to provide a subsidy to only EVs equipped with certified batteries from 2018.

Chinese sources said when the application for the fifth round of EV certification would begin remains unknown. The Chinese government first issued EV battery certification in November of last year and has granted the related certificate every two or four months until the last time it issued it.

Officials from LG Chem and Samsung SDI said they are ready to reapply for battery certifications in China after they failed to get them during the last round in June. But given the fact that the Chinese government generally receives application for one to two weeks and reviews the applications for more than one month, it would be impossible for them to obtain certification within this year, the industry experts said.

In addition, considering that 56 or nearly half of 120 battery manufacturers have already obtained related certifications from the Chinese government through the previous four rounds, it is even uncertain whether the process for the fifth round of certification issuance would take place, the industry observers said. Without the certification, LG Chem and Samsung SDI that each last year opened a battery factory in central China in a move to tighten their grip on the Chinese electric-car market would have trouble finding buyers. The two control one-third of the world’s battery market for electric vehicles.

Worse yet, SK Innovation remained unable to apply for new certification as it does not have a production base in China. Only batteries produced in China are eligible to apply for certification. In May, the battery making unit of major Korean conglomerate SK Group, announced it will build a local plant or seek a joint venture with a local partner to expand its presence in the country, but it has not been able to come up with any concrete result.

Suspicion arises that the Chinese government might have intentionally excluded leading battery makers from Korea and Japan to give more time for Chinese companies to catch up their advanced rivals. Overseas companies that have received certifications so far churn out only a small amount of batteries, posing a threat to Chinese battery makers less than do the leading battery producers.

China is the fastest-growing electric car market in the world. According to a Merrily Lynch’s report, China occupies 51 percent of the global EV car market as of so far this year.

By Jung Wook

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]