American automakers and battery manufacturers are joining forces to actively pursue South Korea and China, which are leading the electric vehicle and battery market.

According to the Ministry of Science and ICT's 'Science and Technology & ICT Policy and Technology Trends', in May, automakers such as GM, Ford, Panasonic, and Tesla, and battery companies such as Form Energy and Albemarle Corporation launched the 'Coalition for American Battery Independence (CABI)' to build a large-scale supply chain for electric vehicles and batteries.

CABI agrees that battery raw materials and manufacturing capabilities are crucial for energy and climate security, and is pursuing a strategy to enhance competitiveness by securing the supply chain throughout the entire process, from securing battery raw materials, including lithium, to processing and refining, and manufacturing components and battery packs.

The alliance plans to request policy support from the U.S. government and tax incentives from Congress for the electric vehicle and battery industries, and is reportedly considering invoking the Defense Production Act if necessary.

The Defense Acquisition Act is a law that allows the U.S. president to order private companies to prioritize government contracts or expand production of key items to protect national security.

Although the law was primarily created to facilitate the smooth production of military supplies, CABI is said to be planning to make it possible to enforce it even in political and economic situations through revisions.

The launch of CABI is believed to have stemmed from a sense of crisis over Korea and China's significant decline in the global electric vehicle and battery market competition.

According to the Global EV Outlook 2022 report, 76% of the world's electric vehicle batteries are produced in China, and 54% of electric vehicles are also manufactured in China.

On the other hand, electric vehicle batteries produced in the United States account for only 7% of the world's total, and electric vehicle production also accounts for just over 10%. Statistics on raw materials show that the total share is less than 3%.

The United States currently has a strong presence in the electric vehicle manufacturing sector, led by Tesla, the world's leading electric vehicle manufacturer. However, its influence in the battery-related industry, a key component of electric vehicles, is minimal.

In reality, Tesla and the Big 3 automakers in the US (GM, Ford, and Stellantis) are all receiving batteries from companies in Korea, China, and Japan, not from US companies.

Japan's Panasonic, Korea's LG Energy Solution, and China's CATL are among the companies supplying batteries to Tesla.

In the electric vehicle battery market in the first quarter of this year, China's CATL ranked first with a 35% share, and announced on the 22nd that it would also supply batteries for the Kia Niro vehicle. LG Energy Solution followed with 15.9%, SK On with 6.6%, and Samsung SDI with 3.8%.

There are also voices saying that Korean companies should not be satisfied with the present.

▲2021 Trends in Global Export Market Shares of the Top 5 BEV Exporting Countries. (Image Source: Federation of Korean Industries)

According to the ITC trade map, the global export market share of the world's top five battery electric vehicle exporters in 2021 increased by 9.5 percentage points for China and 3.8 percentage points for Germany compared to 2020, while Korea, Belgium, and the United States decreased by 0.8 percentage points, 2.1 percentage points, and 8.5 percentage points, respectively.

The market share of LG Energy Solution, Samsung SDI, and SK ON decreased by 4.3 percentage points from 34.7% in 2020 to 30.4% last year.

Kim Bong-man, head of the International Headquarters of the Federation of Korean Industries, said, “China has established itself as the world’s leading battery electric vehicle powerhouse thanks to its abundant reserves of battery raw materials and the Chinese government’s policy financial support for domestic battery companies,” and emphasized, “The new government should strengthen cooperation between the United States, which has been rebuilding its battery supply chain since last year, and Korea-U.S. electric vehicle and battery cooperation.”