South Korea's government has declared a strategic investment plan of 38 trillion won ($29 billion) across the next five years aimed at fortifying its battery industry amidst intense global competition for securing battery supply chains. The announcement, issued jointly by several ministries, highlighted that South Korean companies like LG Energy Solution, Samsung SDI, and SK On (a division of SK Innovation) collectively held a substantial 49 percent stake in the global battery market outside of China as of 2022.
South Korea recognizes the necessity for diversification due to its reliance on foreign nations for essential materials. To address this, the country plans to offer tax incentives and financial aid to domestic companies investing abroad for securing mining rights and refining minerals crucial for battery production. Moreover, it aims to enhance financial support through loans, guarantees, and insurance from institutions like the Export-Import Bank of Korea for battery firms, including those expanding in North America, aligning with the requirements of the US Inflation Reduction Act (IRA).
In light of a decline in electric vehicle sales, which has led to revised sales forecasts for South Korean battery companies in 2024, the recently unveiled initiatives take on heightened significance. These strategic measures are not merely short-term remedies; rather, they are meticulously designed with a forward-looking perspective. The primary goal is to propel South Korea's secondary battery industry to a leading and dominant global position in the long run. Despite the current market challenges, the announced initiatives are comprehensive and far-reaching, strategically positioned to fortify the country's standing in the global battery market, emphasizing sustained growth and resilience for years to come.