SK Innovation to delay China battery factory

SEOUL/BEIJING — South Korea’s SK Innovation Co. Ltd. will delay building an electric vehicle battery factory in China because of regulatory uncertainty in the world’s top auto market, two company officials told Reuters on Friday.

The decision follows proposals from Beijing to toughen regulations on battery makers that could potentially deal a fresh blow to South Korean firms.

China’s Ministry of Industry and Information Technology issued draft certification rules on Tuesday that raised the minimum annual production capacity to eight gigawatt hours for lithium ion battery producers from 200 megawatt hours currently.

Battery makers must prove they meet the standards to be listed in the catalogue of approved producers, a requirement for receiving subsidies.

Market research firm SNE Research said that South Korean battery makers Samsung SDI and LG Chem would not be able to meet the capacity targets, adding only China’s BYD Co. and Amperex Technology Ltd. will meet the requirement as of the end of 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, sparking fears that they may not be eligible for state subsidies.

Samsung SDI and LG Chem have been building EV battery factories in China, as Beijing has rapidly built the world’s largest EV market, paying out billions of dollars in green car subsidies to cut smog.

SK Innovation also 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 for factory construction. —