It is an important development for the electric vehicle industry that giant companies such as China's BYD and South Korea's KG Mobility are in talks to build a joint electric vehicle battery factory in South Korea.
This venture will be the first joint factory between a Chinese battery cell manufacturer and a South Korean automaker. South Korea is the world's largest electric vehicle battery manufacturing base and could help BYD enter this market and expand its customer base.
Analysts say BYD's entry into South Korea could help boost demand for LFP batteries. LFP batteries are a low-cost battery technology that is not widely used by South Korean battery manufacturers such as LG Energy Solution, Samsung, and SK On.
Chinese battery material firms that invested in South Korea to bypass US electric vehicle tax credit rules could also be a key factor for the initiative's success. The US Inflation Reduction Act (IRA) aims to cut the US off the Chinese electric vehicle supply chain. This law stipulates that at least 40 percent of the critical minerals used in an automobile battery must come from the United States or a free trade partner country. South Korea has a free trade agreement with the United States.
BYD and KG Mobility's joint factory venture, if successful, will mark a major milestone for the electric vehicle industry. This initiative could help China and South Korea become even more competitive in the electric vehicle market.
Here are some possible benefits of this initiative:
- It will increase South Korea's electric vehicle battery production capacity, which will put the country in a leading position in this field.
- It will help BYD expand its customer base, which will increase the company's competitiveness in the global market.
- It will help Chinese battery material firms to bypass US electric vehicle tax credit rules.
For this venture to be successful, it will need to overcome some difficulties. These challenges include the cost of building and operating the factory, and the fitment of the factory to the needs of South Korea's electric vehicle industry.
