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Biden win boosts South Korean EV battery makers

LG Chem and Samsung SDI rally as China rivals face further hurdles in US

Samsung SDI introduces its battery cell, module and packs at the InterBattery 2019 exhibition in Seoul. (Photo courtesy of Samsung SDI)

SEOUL -- Joe Biden's win in the U.S. presidential election is giving a lift to South Korean electric vehicle battery makers as investors bet his green policy will help them expand in the American market.

Analysts say South Korean battery makers are in a favorable position compared to their Chinese rivals, as Washington-Beijing tensions are expected to continue under Biden's presidency. South Korean, Chinese and Japanese companies are the leaders in the fast-growing global market for EV batteries.

Biden has pledged to rejoin the Paris Agreement, which aims among other things to reduce greenhouse gas emissions, as one of his first acts as president. Donald Trump withdrew the U.S. from the international agreement on climate change in January 2017.

"We expect that South Korean companies will enjoy rising demand if subsidies for ecofriendly cars increase and control on carbon emissions is tightened in North America where EVs are underperforming," said Kim Hyun-soo, an analyst at Hana Financial Investment.

"We forecast the portion of ecofriendly cars will increase in the U.S. if the country rejoins the Paris Agreement. Biden may resume tax deductions for EVs, as well as lift the subsidy cap of 200,000 EVs per automaker."

LG Chem's shares jumped 12.9% over three days from Nov. 5 when Biden first appeared close to victory at the polls. The price dropped 4.4% on Tuesday on profit-taking movement.

LG Chem is the world's largest EV battery maker with a 24.6% market share for the first three quarters of this year, followed by China's CATL with 23.7% and Japan's Panasonic with 19.5%, according to SNE Research. LG Chem supplies key U.S. EV makers Tesla, GM and Ford, as well as European automakers such as Volkswagen, Renault and Volvo. It also sells its batteries domestically to Hyundai and Kia.

LG Chem has decided to spin off its battery unit this December in an attempt to capitalize on growing interest in the sector amid rising global demand for electric vehicles. LG Chem will fully own LG Energy Solution after the spinoff. The company is also considering listing the battery unit.

Samsung SDI shares soared 16% for the three trading days from Nov. 5 to Nov. 9, and were flat on Tuesday. Samsung SDI is a battery making unit of Samsung Electronics. It is No. 4 in the global market with a 6.2% share, supplying Ford, Fiat and BMW.

SK Innovation's shares surged 18.9% for the three days through Monday and were up 1.9% on Tuesday. It is the sixth-largest player with a 4.4% market share. Its customers include Ford, Volkswagen, Daimler, Hyundai and Kia.

But SK Innovation is embroiled in a legal dispute with LG Chem, which has sued it for allegedly stealing its technology patents. The case is pending in a U.S. court.

The global EV battery market is expanding quickly, led by Europe. McKinsey, the consultancy, has projected that by 2040 battery demand for EVs produced in Europe will reach 1,200 gigawatt-hours per year, compared with 25.5Gw/h last year. That projected battery demand is more than five times the capacity of currently confirmed battery projects in Europe, according to McKinsey.

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