A few years ago, Korean battery companies once dominated the international battery installation rankings. However, with the intensifying global competition in the power battery market, the market share of Korean battery companies has dropped by nearly half over the past four years, while Chinese power battery companies have risen rapidly.

       From being the “global market leader” to now having to “make changes,” what lies behind the changes in South Korea's lithium-ion battery import and export data?

       According to data from Chinese customs, from January to November 2024, China's export value of lithium-ion batteries reached USD 55.074 billion, a year-on-year decrease of 7.8%. The export volume was 3.563 billion units, representing a year-on-year increase of 7.3%. Meanwhile, the import value of lithium-ion batteries was USD 2.249 billion, up by 9% year-on-year, with an import volume of 746 million units, a year-on-year increase of 3.41%.

       China's exports to South Korea have seen a significant decline. From January to November 2024, the export value of lithium-ion batteries from China to South Korea amounted to USD 3.452 billion, a year-on-year decrease of 53%. This decline is likely influenced by the U.S. Inflation Reduction Act (IRA) and the new South Korean electric vehicle purchase subsidy scheme announced by the South Korean Ministry of Environment in 2024. The new subsidy scheme introduces a "battery environmental" factor, which means that subsidies for South Korean consumers purchasing electric vehicles equipped with Chinese lithium iron phosphate batteries could be reduced by up to 40%.

       According to data from the South Korean customs, from January to November 2024, China and Indonesia were the main trading partners for South Korea's imports of lithium-ion battery products, accounting for 95.37% of South Korea's total imports. Specifically, South Korea imported lithium-ion batteries from China worth USD 3.594 billion, a year-on-year decrease of 52.79%, representing 85.77% of South Korea's total imports. Meanwhile, imports from Indonesia amounted to USD 402 million, a significant increase of 10,487% compared to the previous year's USD 3.8 million, accounting for 9.62% of South Korea's total imports

From January to November 2024, South Korea's total export value of lithium-ion battery products amounted to USD 4.833 billion, a year-on-year decrease of 25.9% compared to the previous year's USD 6.523 billion. Specifically, exports to the United States from January to November 2024 reached USD 2.622 billion, down by 28.7% from the same period in 2023 (USD 3.679 billion). Meanwhile, exports to Germany during the same period amounted to USD 153 million, a 75% decrease from the previous year's USD 613 million.

Through the above data analysis, we can intuitively feel the impact of the IRA Act on South Korea's lithium battery import and export trade. It not only affects South Korea's imports from China but also directly impacts changes in South Korea's exports to Europe and the United States.

In 2024, South Korea's imports from Indonesia saw a significant increase. Analysis of the reasons reveals that, in addition to the influence of the IRA Act, this is also closely related to the start of production at LG's factory in Indonesia.

       Further analysis shows that the investors in PT HLI Green Power are Hyundai Motor Group and LG New Energy. According to reports, LG New Energy holds a 50% stake in PT HLI Green Power, while Hyundai Motor Group holds a 25% stake.

       The start of production at PT HLI Green Power has not only greatly promoted the local export of lithium batteries in Indonesia but also had a profound impact on the development of Hyundai Motor Group and LG New Energy.

Impact on Hyundai Motor Group:

       Stabilizing Battery Supply: The start of production at PT HLI Green Power has provided Hyundai Motor Group with a stable battery supply source in Indonesia, avoiding production interruptions caused by insufficient battery supply or transportation issues. This ensures the production schedule and delivery capability of electric vehicles in Indonesia and the Southeast Asian region.

        Reducing Production Costs: Producing batteries locally in Indonesia reduces import costs, transportation costs, and tariffs. Additionally, leveraging Indonesia's abundant nickel resources can further lower the raw material costs of batteries. This enhances Hyundai Motor Group's price competitiveness in the market and helps it launch more cost-effective electric vehicle products.

       Enhancing Market Competitiveness: Hyundai Motor Group has become the first brand in Indonesia capable of producing electric vehicles from batteries to complete vehicles, gaining a competitive edge in the Indonesian and ASEAN electric vehicle market. This enables it to better meet local market demand, improve customer satisfaction, and enhance brand influence and market competitiveness. It also lays a solid foundation for its long-term development in the Southeast Asian market.

       Completing the Industrial Ecosystem: The start of production at this factory has completed Hyundai Motor Group's electric vehicle industrial ecosystem in Indonesia. From raw material procurement to battery and vehicle production, and from expanding charging networks to battery recycling, a complete localized industrial chain has been formed. This helps the group better integrate resources, improve overall operational efficiency, and enhance synergies.

Impact on LG New Energy:

      Expanding Market Share: The start of production at PT HLI Green Power offers LG New Energy the opportunity to expand its market in Indonesia and Southeast Asia. The batteries produced can not only supply Hyundai Motor Group's local factories but also potentially meet the demands of other automakers, thereby expanding its market share and influence in the Southeast Asian region.

       Enhancing Supply Stability: Establishing a production base in Indonesia allows LG New Energy to better cope with global market demand fluctuations and supply risks, ensuring stable battery supply. Additionally, cooperation with Hyundai Motor Group helps it further optimize supply chain management and improve supply efficiency and quality.

       Strengthening Technical Cooperation and Innovation: In cooperation with Hyundai Motor Group, both parties can jointly conduct battery technology research and development, share technical resources and research results, accelerate the development and application of next-generation battery technologies, and enhance LG New Energy's competitiveness in the battery technology field.

       Building a Positive Brand Image: The start of production at PT HLI Green Power demonstrates LG New Energy's determination to actively layout and invest globally and its ability to closely cooperate with internationally renowned automakers. This helps enhance its brand recognition and reputation in the global battery industry and attract more partners and customers.

       The start of production at PT HLI Green Power has not only driven the development of the local battery industry in Indonesia but also provided important battery materials and products to the global market.

       Currently, the international political and economic situation is complex and ever-changing. For the international lithium-ion battery market, meeting challenges and seeking opportunities are the keys to breaking through and achieving long-term success. Chinese lithium-ion battery companies are also actively responding to this once-in-a-century major change by adopting overseas factory-building strategies for strategic layout. In the future, with the acceleration of global energy transition and the enhancement of environmental awareness, the lithium-ion battery industry will usher in a broader development space.