Korean company delays battery plant as China floats tougher rules
South Korea's SK Innovation Co. will delay building an electric vehicle battery factory in China because of regulatory uncertainties, two company officials told Reuters on Friday.
The decision follows proposals from Beijing to toughen regulations on battery makers that could deal a fresh blow to South Korean companies.
China's Ministry of Industry and Information Technology issued draft certification rules on Tuesday that raised the minimum annual production capacity to 8 gigawatt hours for lithium ion battery producers, up from 200 megawatt hours currently.
Battery makers must prove they meet standards to be listed in the catalogue of approved producers, a requirement for receiving subsidies.
Market research firm SNE Research concluded that Korean battery makers Samsung SDI and LG Chem would not be able to meet the capacity targets. Only China's BYD Co and Amperex Technology will meet the requirement this year.
The rules, if finalized, could be the latest setback to Samsung SDI and LG Chem, which have failed to be listed in China's battery catalogue. That has sparked fears that they may not be eligible for state subsidies.
SK Innovation said in April that it will start building an EV battery factory this year with China's Beijing Automotive Group and Beijing Electronics.
"Given this current situation, it does not make sense to build the factory now," one of the SK officials said. The official said SK and its partners will reconsider the timing of construction.
"We are closely watching the regulations," a spokesman at LG Chem said, while a Samsung SDI spokesman declined to comment.
South Korea's trade ministry on Friday expressed concerns about the potential China regulations, adding that it will take "all possible measures" to resolve the problems.
China's Ministry of Industry and Information Technology issued draft certification rules on Tuesday that raised the minimum annual production capacity to 8 gigawatt hours for lithium ion battery producers, up from 200 megawatt hours currently.
Battery makers must prove they meet standards to be listed in the catalogue of approved producers, a requirement for receiving subsidies.
Market research firm SNE Research concluded that Korean battery makers Samsung SDI and LG Chem would not be able to meet the capacity targets. Only China's BYD Co and Amperex Technology will meet the requirement this year.
The rules, if finalized, could be the latest setback to Samsung SDI and LG Chem, which have failed to be listed in China's battery catalogue. That has sparked fears that they may not be eligible for state subsidies.
SK Innovation said in April that it will start building an EV battery factory this year with China's Beijing Automotive Group and Beijing Electronics.
"Given this current situation, it does not make sense to build the factory now," one of the SK officials said. The official said SK and its partners will reconsider the timing of construction.
"We are closely watching the regulations," a spokesman at LG Chem said, while a Samsung SDI spokesman declined to comment.
South Korea's trade ministry on Friday expressed concerns about the potential China regulations, adding that it will take "all possible measures" to resolve the problems.
