South Korea’s battery industry expects gains as Europe imposes new restrictions on Chinese-made electric vehicles (EV). With European facilities, Korea’s three largest battery manufacturers stand to benefit.
On July 5, the European Commission announced provisional tariffs of 17.4% to 37.6% on Chinese electric vehicles. Following an anti-subsidy investigation, these tariffs add to the existing 10% tariff and are effective until November. If approved by at least 15 EU member states, representing 65% of the EU’s population, in a November referendum, they could be extended for five years.
The tariffs vary based on the manufacturer’s cooperation with the investigation, affecting most Chinese-made EV brands. BYD faces a 17.4 percentage point increase, Geely 19.9 percentage points, and SAIC 37.6 percentage points. Non-cooperating Chinese EV makers will be subject to a collective 37.6% surcharge.
The EU’s decision is expected to impact Korean battery manufacturers positively. Despite slower growth in the European EV market, Korean companies have faced declining European capacity utilization rates.
SNE Research reported that 1.19 million battery electric vehicles (BEV) and plug-in hybrid vehicles (PHEV) were sold in Europe in the first five months of this year, a 4.5% increase from last year. In comparison, China sold 3.38 million vehicles, up 31.7%, and North America sold about 680,000 vehicles, up 10.9%.
Europe’s global market share decreased by 3.4 percentage points, from 24.5% to 21.1% in the first five months of this year. This decline is attributed to Germany, Europe’s largest market, reducing and ending its EV subsidies early.
Despite this, Korean battery companies are actively expanding in Europe. LG Energy Solutions recently secured a contract with Renault’s EV unit, Ampere, to supply 39 gigawatts of pouch lithium iron phosphate (LFP) batteries over five years starting in late 2025. The contract’s value is estimated at $4 to $5 trillion.
Additionally, troubles at Northvolt, Europe’s largest battery company, present opportunities for Korean manufacturers. Due to yield difficulties, BMW recently canceled a €2 billion order for prismatic battery cells from Northvolt, opening the door for Korean firms.
