The Korea Herald reports that pre-pandemic shortages of battery supply, which caused delays for European automakers, have been made worse by the global crisis. The situation became urgent enough for the Polish government to waive travel restrictions, allowing 200 LG Chem technicians to resume expansion of its battery gigafactory in Wroclaw.
The move was made at least in part to avoid disruptions in battery supply to European automakers, including Volkswagen, Mercedes-Benz, Audi, and Renault. Critically, battery supply constraints previously caused production halts and delays for the Audi E-tron, Jaguar I-Pace, Mercedes-Benz EQC, and Kia electric vehicles.
Korean Herald quotes an industry source:
When the current game of chicken ends, the EV battery market will be controlled by a handful of suppliers.
The Polish government waived its two-week quarantine requirement for LG Chem employees who have tested negative for COVID-19 in Korea. Also, on April 5, the Hungarian government allowed SK Innovation to dispatch some 300 employees on a chartered flight to the country to restart the company’s EV battery plant in Komarom despite its entry ban on all foreign nationals since March 16.
An industry source said:
Everyone is asking for more batteries, but supplies are limited. This allows EV battery makers to stand almost equal in the power game with automakers. The EV market is growing rapidly, but there are only a few who can manufacture high-quality EV batteries.
The situation gives unprecedented bargaining power to LG Chem, Samsung SDI, and SK Innovation. Once an automaker decides on a specific cell with certain features and pricing, it’s difficult to change course.
Automakers are jockeying for position, forming partnerships with battery suppliers, making large investments, and expanding their in-house research efforts. Poland and Hungary offered massive subsidies to respectively lure LG Chem and Samsung’s SDI to build plants. Tesla is building its own gigafactory near Berlin.
In late March, the European Investment Bank announced a €480 million ($527 million) loan agreement with LG Chem’s Poland-based subsidiary. The loan will allow LG Chem to expand output at its Wrocław facility from 35 GWh to a massive 65-GWh level.
China’s state-sponsored battery maker CATL bypassed subsidies and build its own plant in Germany. Observers believe that CATL moved directly into Germany to exert more power over its domestic auto industry. According to sources, CATL is positioning to offer lower prices, although its technology is considered to be lower quality than what’s offered by South Korean battery makers.
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