South Korean battery makers flag provide chain worries amid U.S. EV tax credit score reform By Reuters

By Heekyong Yang and David Shepardson

SEOUL/WASHINGTON (Reuters) – South Korean battery makers have urged the U.S. authorities to think about realities of a fancy provide chain for the trade and never maintain the sector to “not possible necessities” forward of the implementation of latest U.S. EV tax credit score guidelines.

LG Power Answer Ltd (LGES), SK Innovation’s SK On and Samsung (KS:) SDI Co Ltd expressed their considerations concerning the electrical automobile tax credit score guidelines in feedback submitted to the U.S. Inner Income Service (IRS).

Underneath the brand new EV guidelines, to be applied from Jan. 1, 2023, not less than 40% of the worth of essential minerals for batteries should be from america or an American free-trade associate for producers to qualify for U.S. tax credit.

That may progressively rise to 80% in 2027.

“This can be very tough to construct most clear vitality applied sciences, together with EV batteries in america, with out utilizing sure foreign-made components and, particularly, uncooked supplies extracted or processed in China,” LGES stated.

LGES added in its remark that remodeling the provision chain can’t happen “in a single day” and urged america to not maintain the trade to “not possible necessities and timelines”.

LGES, SK On and Samsung SDI, three main South Korean battery makers that offer to automakers equivalent to Tesla (NASDAQ:) Inc, Normal Motors Co (NYSE:) and Ford Motor (NYSE:) Co amongst others, collectively command greater than 1 / 4 of the worldwide EV battery market, in response to SNE Analysis.

SK On echoed the considerations.

“A restricted interpretation would additionally threat unintended market outcomes, equivalent to sudden worth hikes for suppliers in particular international locations, and unnecessarily focus processing in restricted locations. Such market distortions may create synthetic prices and obstacles alongside the provision chain,” SK On stated.

Samsung SDI additionally urged america to implement guidelines that permit flexibility to fulfill provide chain necessities, including that automotive provide chain contracts typically final a number of years.

LGES has additionally requested america to ascertain a confidential course of to share battery composition, pricing and sourcing info with the Treasury Division to make sure that such delicate info just isn’t disclosed to rivals.

The U.S. Treasury and IRS began in search of public touch upon the brand new regulation final month. A complete of 821 feedback from automakers, components makers in addition to overseas governments have been submitted to the IRS.