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Hyundai Motor seeks US leniency on EV batteries made with Chinese mineralsHyundai Motor Group and battery units of Samsung and LG are calling on the U.S. government to delay the implementation of a rule that restricts electric vehicle (EV) batteries with Chinese materials from receiving subsidies from the world's largest economy, companies said Monday.
Under the regulation, a joint venture with a more-than-25-percent stake held by a Chinese entity is classified as a Foreign Entity of Concern (FEOC). Any EVs with battery minerals sourced from an FEOC cannot receive subsidies from the U.S. government from 2025.
In a written request to the U.S. Department of the Treasury, Hyundai Motor Group asked the department to "temporarily adopt a list of applicable critical materials, including graphite and a limited number of other applicable critical materials, that would be temporarily excluded from the application of the proposed rule."
Industry officials said the timeline is too short for Korean firms to stably diversify the supply channel from other territories due to China's dominance in some key battery materials production.
For example, China refined and produced 69 percent of the synthetic graphite worldwide in 2022, which is the reason that they say Korean firms should take the issue more seriously and come up with specific countermeasures from a mid- to longer-term viewpoint.
They said Korean firms are advised to diversify their supply chain from a long-term perspective, so they do not unexpectedly fall victim to growing protectionism from the United States and other big economies.
"Korean automakers and battery firms should map out their long-term plans to diversify their supply channels for key battery materials," said Kim Moon-tae, an industry policy division head at the Korea Chamber of Commerce and Industry.
Even if it is still a time-consuming task for them, they should not delay the move any longer, in a preemptive step to tackle the escalating external political uncertainty, according to him.
"The imminent task is to persuade the U.S. government to delay the timeline on the rule," he said. "But companies have little to do for now, so the Korean government and authorities have to represent them and send requests continuously to the U.S. authority."
An official from a local automaker said the voice of concern is raised not just by the Korean firms, but their U.S. counterparts.
"We expect the U.S. authority to show more leniency to automakers here and abroad, as the home-grown automakers from the world's largest economy also rely on sourcing materials for electric vehicle (EV) batteries from China," the official said.
LG Energy Solution and Samsung SDI, two of Korea's largest battery manufacturers for EVs, also delivered a similar request to the U.S., urging the latter to consider delaying the implementation of the rule for another two years due to their heavy reliance on Chinese battery minerals."
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