To assist businesses in adapting to the US Inflation Reduction Act, South Korea announced it will give its battery manufacturers 7 trillion won ($5.32 billion) in financial support over the course of the next five years.
According to the industry ministry, the government would provide more loans and tax credits for Korean companies' battery and material production facilities in the area, as well as a 20 percent reduction in lending rates and insurance premiums.
In order to be eligible for new US federal incentives under the Inflation Reduction Act, automakers must get a specific percentage of essential minerals for EV batteries from the US or a US free-trade partner, according to tighter tax regulations published last week by the US Treasury Department.
According to the law, 40% of the value of essential minerals must be acquired from the United States or a free trade partner in order to qualify for a US$3,750 credit and 50% of the value of battery components must be manufactured or assembled in North America.
"Both the government and businessmen should cooperate to find solutions together to effectively cope with situations changing rapidly after the Inflation Reduction Act," Trade Minister Lee Chang-yang said while presiding over a meeting with major battery cell makers and materials firms.
In order to improve the stability of the battery supply chain, South Korea established the government-backed battery alliance in November. The goal is to better obtain essential metals that China dominates.
Three of the top five EV battery cell manufacturers in the world are from South Korea: LG Energy Solution (LGES), Samsung SDI, and SK On. These companies control more than a quarter of the global market and provide companies like Tesla, Volkswagen AG, and General Motors.
LGES announced in March that it would restart a US battery project that had been put on hold with a US$5.6 billion investment in Arizona in order to be eligible for federal subsidies under the Inflation Reduction Act.