IRA Presents Opportunities for Korean Companies in North American EV Market

By Anjali Joshi

Battery cell manufacturers have started taking action to reduce the proportion of Chinese battery material components from the supply chain and are announcing additional factories in the United States. Both of these moves are in response to the Inflation Reduction Act (IRA), which sets strict domestic content requirements for EV incentives while offering incentives to build batteries in the country.

After the announcement of its new Kansas factory in July, Panasonic has recently announced its plans to set up another battery cell production factory, expected to be in Oklahoma. LGES and Honda will also establish a joint venture company to build a 40 GWh lithium-ion EV battery plant in Ohio which is slated to come online by 2025. Toyota will invest around US$2.5 billion in Toyota Battery Manufacturing in North Carolina.

In addition to existing battery cell manufacturers, strong support and incentives provided by the IRA is also encouraging new companies to expand their presence in the U.S. market. Turkey-based integrator Kontrolmatik Technology, Energy and Engineering Inc., which announced its expansion to the US market through a 2 GWh cell manufacturing facility in April, stepped up its planned capacity to 3 GWh right after the IRA was passed. While the construction of the factory has not even started yet, the company has already begun planning for its second U.S. factory.

The IRA not only provides incentives for domestic battery cell production, but also on the midstream segment of the battery supply chain. As a result, South Korean battery makers- LG Energy Solution, SK On, and Samsung SDI- are looking to expand their collaboration with domestic battery material suppliers as the US sanctions on Chinese battery material components are becoming more material. Precursor companies like EcoProBM and POSCO Chemical are already supplying cathode and anode materials to South Korean battery cell makers. These South Korean battery material companies are now looking to expand their precursor production capacity, both domestically and in North America.

EcoProBM plans to expand its current precursor production capacity from 50,000 tons to 200,000 tons by 2024, both at existing South Korean plants and a new U.S. production facility. POSCO Chemical plans to increase its precursor production capacity to 220,000 tons by 2025 and 440,000 tons by 2030 via a new U.S. production facility. The company is also looking to start production of artificial graphite in the United States. Furthermore, the two companies are also planning to develop their own raw materials needed to produce cathode and anode active materials.

Going one step further in the battery supply chain, localization of electrolyte and separator materials is also expected to take place in the near future. Companies like Enchem, SK IE Technology, and Enerever Battery Solutions are looking to set up facilities to make electrolytes, wet separation membranes, and dry separators in the United States.

Source: CEA