The U.S. Policy Shift Is Creating Lucrative Opportunities for Korean Battery Firms
The production line at POSCO Future M’s artificial graphite anode plant in Pohang. (Photo courtesy of POSCO Future M)
As the U.S. accelerates its battery supply chain realignment to decouple from China, domestic battery companies are successively winning trillion-won contracts. Recently, Samsung SDI and POSCO Future M have signed a series of large-scale supply contracts with American companies, raising expectations of a windfall for the ‘K-battery’ industry.
According to industry sources on the 18th, Samsung SDI America (SDIA), the U.S. subsidiary of Samsung SDI, signed a supply contract for Energy Storage System (ESS) batteries worth approximately 1.5 trillion won (approximately $1.1 billion) with a major U.S. energy company on March 16.
The batteries are scheduled to be produced at the ‘StarPlus Energy’ plant, a joint venture between Samsung SDI and Stellantis located in Indiana, USA. Nickel-Cobalt-Aluminum (NCA) batteries and Lithium Iron Phosphate (LFP) batteries will be supplied in phases from this year until 2029.
Previously, at the end of last year, Samsung SDI also signed a supply contract for ESS LFP batteries worth over 2 trillion won with a U.S. energy infrastructure development and operation company. Having secured another large-scale order, Samsung SDI plans to accelerate the expansion of its global ESS business. It is known to be in negotiations for additional supply contracts with multiple global customers.
In a situation where China dominates about 70% of the U.S. ESS battery market with low prices as its weapon, Samsung SDI’s recent orders are significant. It is being assessed that the company is skillfully capitalizing on the policies of the U.S. administration aimed at reducing dependence on Chinese-made batteries. Samsung SDI is accelerating the expansion of its production capacity by converting parts of its electric vehicle battery production plants into ESS lines.
Previously, LG Energy Solution also drew industry attention when its client for an ESS battery supply contract worth around 6 trillion won, signed last July, was confirmed to be the U.S. company Tesla.
In a briefing document related to the Indo-Pacific Energy Ministers and Business Forum (IPEM) held in Tokyo, Japan, on March 14 and 15, the U.S. government officially announced the ESS battery supply contract between LG Energy Solution and Tesla. The U.S. government mentioned that LG Energy Solution plans to supply LFP batteries worth $4.3 billion to Tesla from its plant in Lansing, Michigan.
It is considered unusual that the U.S. government and Tesla, which are typically conservative about disclosing supply chain information, explicitly named LG Energy Solution as a battery supplier. Some analysts suggest that the U.S. made this decision to emphasize its policy of decoupling from China in industries such as batteries.
It is not just battery makers; battery material companies are also continuing to win orders from the U.S.
POSCO Future M announced on March 16 that it had signed a long-term supply contract for artificial graphite anode material worth approximately 1.0149 trillion won with a global automaker. This contract is the largest since POSCO Future M entered the anode material business in 2011. Industry sources speculate that the counterparty to the contract is the U.S. company Tesla.
POSCO Future M’s latest contract success is also analyzed to have been influenced by the U.S. policy of supply chain diversification aimed at decoupling from China. As Chinese companies’ share of the anode material market reached 90%, the U.S. has moved to counter them by imposing a 35% tariff on Chinese-made anode materials. In this atmosphere, opportunities for ‘K-battery’ and battery material companies are expanding.
Lee Chang-min, a researcher at KB Securities, analyzed, “The central axis of the U.S. battery market is rapidly shifting from electric vehicles to ESS, and the majority of ESS demand comes from AI infrastructure.” He added, “As AI infrastructure is also used for military purposes, the movement to exclude Chinese companies from the supply chain is expanding.”
Lee continued, “For batteries produced locally in the U.S., it is crucial to meet the eligibility requirements for the Advanced Manufacturing Production Credit (AMPC).” He predicted, “To receive producer subsidies, the proportion of Foreign Entities of Concern (FEOCs), such as those from China, in the supply chain must be gradually reduced, so the U.S. market share of Chinese-made anode materials will trend downwards.”
Jung Min-hee
pr@businesskorea.co.kr
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