Government to pump $227 million into EV batteries, materials

Industry Minister Lee Chang-yang, right, looks around LG Energy Solution's EV battery plant in Ochang, North Chungcheong, on Thursday. [NEWS1]

The Korean government will inject 300 billion won ($227 million) into electric vehicle (EV) batteries and materials by 2027 as it seeks to make the products top export items.

The funding, which will come from the budget of the Industry Ministry, came as Korea’s mainstay export products such as semiconductors and petrochemicals are struggling.

Industry Minister Lee Chang-yang announced the strategy during his visit to LG Energy Solution’s EV manufacturing facility in Ochang, North Chungcheong.

A large portion of the 300 billion won will go towards the development of high-nickel cathodes that contain at least 95 percent of nickel and silicon anodes with over 25 percent of silicon, the key materials required to make EV batteries with higher energy efficiency than conventional batteries currently in use.

The funding will be also used in developing lower-end batteries like LFP or lithium iron phosphate to diversify the export items.

Korea’s major export items have been semiconductors, cars, petrochemicals, machinery, steel and passenger and cargo ships since 2010 on an annual basis.

But the trend started changing this year. The combined revenue of cars and auto component exports was $7.6 billion in February, 15.2 percent of the country’s total exports.

That was more than February’s semiconductor exports, which came in at $5.96 billion.

The government is trying to support the manufacturers of EVs and their batteries and materials.

The government announced in May that EV manufacturing investments could soon qualify for tax credits totaling 35 percent.

The Finance Ministry said it will add the EV and hydrogen categories to the country's list of strategic industries and offer the same tax credits it has been providing to chip, battery and vaccine investments.

Under the so-called K-EV Act, the tax credit on EV investments may be increased from the current 8 percent to 15 percent for big companies.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]