Samsung SDI batteries fail to get official nod in China

Anhui Jianghuai Automobile has stopped producing an electric SUV equipped with Samsung SDI batteries on concerns it may be stuck with unsold stock if the model is disqualified from government subsidies because the Korean supplier isn’t on a list of approved vendors.

The Chinese carmaker will resume manufacturing the iEV6s sport utility vehicle, its most expensive electric model at 234,800 yuan ($35,000) before subsidies, only after Samsung SDI makes it onto the government’s approved list, according to Wang Fanglong, a Jianghuai Auto executive in charge of new-energy vehicle research and development.

“We are cautious about selling iEV6s because of the huge policy risks,” Wang said in an interview. “The policy may change any time.”

China has used a combination of subsidies and directives to push local governments, automakers and consumers to embrace the use of electric vehicles, which are seen as a way to reduce air pollution while serving the strategic goal of cutting oil imports. State incentives are coming under increased scrutiny amid a probe into a funding fraud and as the government weans companies from handouts to speed up improvements in technology.

Samsung SDI and LG Chem are among foreign battery makers that have not made the list of suppliers qualifying for subsidies, despite producing the power units in China.

“Domestic automakers have been favoring Korean and Japanese makers because prices are lower and the batteries have better performance,” said Wang Liusheng, a Shanghai-based auto analyst with China Merchants Securities. “To a certain extent, most of them are worried about the battery regulations.”

The Ministry of Industry and Information Technology asked battery makers in May 2015 to submit to a quality review and has since affirmed 25 companies in three separate batches.

Samsung SDI and LG Chem said the companies will supplement their application documents after failing to get approved in June. Bloomberg