BYD, KG Mobility in talks on battery joint venture in South Korea -source

KG Mobility

23/08/2023 11:09

SEOUL, Aug 23 (Reuters) - China's BYD Co Ltd  002594.SZ 
and South Korea's KG Mobility Co Ltd  003620.KS  are in talks to
jointly build an electric vehicle (EV) battery plant in South
Korea, a source told Reuters on Wednesday. 
    The Chinese battery and EV maker and the South Korean
automaker hope to secure stable battery supplies through the
venture, said the source with direct knowledge of the matter,
declining to be identified due to the sensitivity of the matter.
    Bloomberg said the factory aims to start mass production in
January 2025, citing unnamed industry sources. 
    BYD - the world's No.2 EV battery maker - and KG Mobility -
formerly known as SsangYong Motor Co - did not immediately
respond to Reuters requests for comment. 
    Their venture would be the first joint factory between a
Chinese battery cell maker and South Korean carmaker in South
Korea. 
    Analysts said BYD's entrance to South Korea, home to the
world's three big battery producers - LG Energy Solution
 373220.KS , Samsung SDI  006400.KS  and SK On - could help
expand its customer base. 
     "It is indeed a significant event, a major cell maker like
BYD having production capacity in South Korea, where local cell
makers have not yet mastered technology to offer low-cost
batteries BYD could offer to automakers," said Kang Dong-jin, an
analyst at Hyundai Motor Securities. 
    BYD specializes in lithium-iron-phosphate (LFP) batteries,
something the South Korean battery trio do not yet mass produce.
Their focus is on nickel cobalt batteries. 
    Chinese battery materials firms are ramping up investment in
South Korea, announcing projects worth billions of dollars this
year to try to circumvent U.S. electric vehicle (EV) tax credit
rules aimed at lowering reliance on Chinese supply chains.
    The U.S. Inflation Reduction Act (IRA) is designed to wean
the United States off the Chinese supply chain for EVs. It
requires at least 40% of the value of critical minerals used in
an auto battery to be sourced from the United States or a free
trade partner to qualify for a $3,750 tax credit per vehicle.
South Korea has a free-trade agreement with the United States.
    Ningbo Ronbay New Energy Technology  688005.SS , China's
leading materials maker for EV batteries, said last week that it
had decided to expand cathode materials production capacity at
its South Korea facility to tackle the U.S. EV tax credit rules.

 (Reporting by Heekyong Yang in Seoul and Zoey Zhang in
Shanghai; editing by John Stonestreet)
 ((Heekyong.Yang@thomsonreuters.com;))