SK Innovation to postpone China battery factory on regulatory uncertainty

South Korea’s SK Innovation Co Ltd will postpone constructing an electric automobile battery factory in China because of regulative uncertainty in worldwide leading car market, two company authorities informed Reuters on Friday.

The decision follows propositions from Beijing to strengthen guidelines on battery makers that could possibly deal a fresh blow to South Korean firms.

China’s Ministry of Industry and Information Technology released draft certification guidelines on Tuesday that increased the minimum annual production capacity to 8 gigawatt hours for lithium ion battery manufacturers from 200 megawatt hours presently.

Battery makers need to prove they meet the requirements to be listed in the brochure of authorized manufacturers, a requirement for getting subsidies.

Market research firm SNE Research stated that South Korean battery makers Samsung SDI and LG Chem would not have the ability to fulfill the capacity targets, adding only China’s BYD Co and Amperex Technology Ltd will satisfy the requirement by the end of this year.

The guidelines, if settled, could be the most recent setback to Samsung SDI and LG Chem, which have failed to be listed in China’s battery catalogue, sparking fears that they might not be qualified for state subsidies.

Samsung SDI and LG Chem have been developing EV battery factories in China, as Beijing has rapidly constructed the world’s biggest EV market, paying out billions of dollars in green automobile aids to cut smog.

SK Innovation likewise said in April that it will start constructing an EV battery factory this year along with China’s Beijing Automotive Group and Beijing Electronics.