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An electric vehicle battery plant in China jointly-owned by South Korean conglomerate SK Innovation has been closed since January, the company said, making it the latest South Korean battery maker to run into troubles in China as Beijing boosts domestic producers.
The company confirmed the halt in operations to the Financial Times on Friday, after local media reported the closure. The plant was a joint-venture with two Chinese companies in which SK Innovation owns a roughly 40 per cent stake. SK said its Chinese partners had decided to halt production but had not provided a clear explanation, write Tom Hancock and Kang Buseong.
Trade tensions between South Korea and China have spiked in recent months over Thaad, a US-designed missile defence system being installed by Seoul, with Beijing pressuring South Korean businesses. But SK Innovation said “we don’t think that the decision is just because of China’s economic retaliation out of Korea’s Thaad deployment”.
South Korean media reported that the China plant, which assembles battery cells produced in Korea, generates annual revenues of about Won50bn ($45m), and said the production halt was due to Chinese regulations favouring domestic producers, which slowed orders at the end of last year.
China last year released a list of companies allowed to supply batteries in the country which excluded foreign manufacturers. That has disappointed South Korea’s Samsung SDI and LG Chem, who both opened large battery plants in China in hopes of serving the country’s EV market — the world’s largest.
Meanwhile Taiwanese Apple assembler Foxconn announced this week it would invest approximately $145m for a 1.2 per cent stake in China’s fastest growing electric vehicle battery manufacturer, Contemporary Amperex Technology (CATL), in what it called a “long term investment”. The deal values the privately-owned company at about $12bn.