By on July 14, 2010

With analysts already worrying about Lithium-ion battery oversupply in Japan and the US, the Korean government is shaking up the sector even more by announcing an investment of 15 trillion won ($12.5b) in the country’s battery sector. Called “Battery 2020 Project,” the money will be spent on building up Korean R&D capabilities, with the goal of improving the country’s ability to source Li-ion components. Korea currently imports many of the components needed for its domestic battery industry, and according to Yonhap, this investment will seek to develop Korean sources for up to 75 percent of the battery industry’s components by 2020. A government official explains:

South Korea’s Samsung SDI and LG Chem already control 38 percent of the market, but actual percentage of local parts and technology used to make these products stand at less than 20 percent

So what’s the problem? By 2015, EV battery supplies are projected to be somewhere in the range of 200 percent of overall market demand for EVs themselves. Though over-investment will help drive down the price of batteries, potentially improving demand for EVs, there’s little business sense underlying the environmentally-motivated rush to fund the Li-ion industry. And Korea is hardly the only country spending big bucks on the EV battery sector: The US has spent billions over the last several years in retooling loans for companies like Tesla and Fisker, as well as stimulus money and DOE grants to battery makers.

In fact, one of the firms receiving a healthy amount of US government support is the Korean firm LG Chem, which received about $150m in DOE grants to build its $300m Holland, MI plant. Indeed, President Obama is in Michigan today, touting his administration’s investment in firms like LG Chem. But, like the larger Detroit auto industry that Obama is so anxious to support, America’s battery industry is starting behind its Asian competition, and with this Korean investment, it will need more government money just to keep up. And when prices for Li-ions drops further, somebody is going to have to take a bath. The way things have been playing out for the last several years, it would come as no surprise to find out that the big loser here (again) was the American taxpayer.

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6 Comments on “Korea Invests $12.5b In Li-ion Battery Sector...”

  • avatar
    Some Guy

    And people complained about spending $50 billion or so to save an entire car company? This $12 billion is just for pie in the sky battery research in hopes that it MAY lead to something purposeful. I do agree that it’s important research that had to be done by someone, though.

    This shows how some foreign countries have foresight towards the future. Apparently, smart people in Korea are valued. In America, smart people are beat up for their lunch money and are laughed at. In the U.S., professional sports athletes are revered for their amazing ability of moving a ball around a field and putting it through a rectangular or round opening better than anyone else. Yeah, that’s important for the betterment of the human race.

  • avatar

    I don’t see that major govts have much choice other than to make sure that their own auto industry will have access to domestically produced batteries. Depending on foreign suppliers to provide leading edge battery tech at competitive pricing would be taking a huge gamble on the free market. Battery technology and availablity will be as important in the coming years as ICE technology and availability is today. Would it have been prudent 10 years ago to soft pedal ICE development? And projected production capacity is just that: projected. If battery demand really outstrips production by 200% any time soon, many of the planned production facilities will be deferred.

  • avatar
    Robert Schwartz

    It is good to know that the US is not the only country that is flushing taxpayer money down the toilet.

  • avatar

    so where on Earth are these metals being mined?
    buying up the rights or mines could the smart thing, one can make -remake these batt but when u pay thru the nose for metals u are going to be screwed!

  • avatar
    John Horner

    The Korean government spends billions making sure it gets a big piece of the next manufacturing pie. Meanwhile, back here in the US we can only seem to agree to spend money on wars.

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