Carmakers Desperate to Find Reliable EV Battery Supply

  • By Ryu Jung

    March 11, 2021 11:09

    Global automakers in the U.S. have sent a petition to the International Trade Commission seeking leniency for SK Innovation in a legal dispute over the misappropriation of trade secrets with rival LG Energy Solution.

    The automakers are afraid that any punitive measures taken against SK could seriously hurt their battery supply. After the ITC's preliminary ruling in favor of LG, which could force SK to shut its factory in Georgia, Volkswagen and Ford said they could face huge problems producing electric cars, and it would cost American jobs during the coronavirus pandemic.

    Teaser images of Kia's first purely electric car, the EV6

    ◆ Battery Makers' Clout

    Battery demand is increasing exponentially as carmakers start shifting to electric cars, but suppliers of the fuel cells have been unable to keep up. This has forced automakers to go all out to secure stable supplies of batteries.

    GM is currently building a joint venture battery factory with LG, which will be the second for the Korean company. This could raise concerns that GM is becoming too dependent on LG. But industry insiders say stable supplies are the prime concern. There are even rumors that LG had to turn down a supply request from another automaker because it was already at full capacity.

    The situation is expected to continue for a considerable time. Market analysts SNE Research said battery supply currently surpasses demand, and there is a dire shortage if Chinese manufacturers are excluded. It warned that demand will surpass supply until 2025 and a supply shortage will last until 2030.

    One U.S. automaker with a Korean supplier recently saw one of its electric cars catch fire. Such an incident would usually prompt the automaker to press the battery producer to compensate for damage. But the automaker is apparently hesitant to sue the battery maker for fear of a disruption in supply.

    ◆ Chinese Dominance of Raw Materials

    Another problem is that China currently controls the supply of raw materials for lithium-ion batteries like nickel, cobalt and manganese. Africa's Congo region accounts for 70 percent of the supply of cobalt, which is the most expensive of them, and Chinese companies own the rights to four out of seven cobalt mines in the Congo.

    China also accounts for 76 percent of the global supply of precursors -- a combination of nickel, cobalt and manganese. Aluminum, which is not a rare metal, is also necessary to produce anodes, and China controls 57 percent of global aluminum output. It also accounts for 64 percent of the global output of graphite and silicon, which are used to make cathodes.

    What is most troubling is that China accounts for 98 percent of global output of rare-earth elements that are used to make permanent magnets for electric motors. China has the world's largest reserves (44 million tons) of rare-earth elements. Its proportion of global output last year fell to 62 percent due to checks by the U.S. and Australia, but the U.S. still relies on China, sending raw materials to the Asian country for processing and importing them again.

    Korea imports half its rare-earth elements from China. That means they can always be used as a bargaining chip by China in its trade war with the U.S. Last year, China passed a law authorizing the limitation of rare-earth-element production and exports.

    • Copyright © Chosunilbo & Chosun.com
    Previous Next
    All Headlines Back to Top