China Denies Battery Certifications For LG Chem, Samsung SDI

JUN 22 2016 BY MARK KANE 38

LG Chem lithium-ion battery cell

LG Chem lithium-ion battery cell

Samsung SDI lithium-ion batteries

Samsung SDI lithium-ion batteries

Samsung SDI and LG Chem’s problems in China continues to swell after a recent rejection of certification requests for their lithium-ion batteries.

Previously, the Chinese government withdrew subsidies to electric buses makers with batteries using anything other than LFP-type. LG Chem and Samsung SDI  both produce higher energy density cells of a different chemistry, that don’t qualify.

Now the South Korean pair lack battery certifications from China, which could result in the end of subsidies for electric cars equipped with such batteries (from 2018).

“The decision by China’s Ministry of Industry and Information Technology means that electric cars that use LG or Samsung batteries may be at risk of becoming ineligible for government subsidies. Chinese authorities have recently said they’re considering limiting the state subsidies presently offered for the purchase of electric cars to only those vehicles with certified batteries from as early as 2018.

Without state subsidies, which can account for as much as 40% of the price of an electric vehicle in China, battery suppliers will have trouble finding buyers, analysts said.

Thirty-one Chinese battery makers that also applied for certification in the same round have made it to the list.”

Well, the carmakers themselves will not be happy at all either because they will also need to secure new lithium-ion cell suppliers … just in case corrective action is not taken, or assurances of compliance is made.

The “battery certification” is especially suspicious in this case because the reasons are as of yet unknown.

“LG and Samsung said they haven’t been notified of the reasons for their exclusion.

Both companies said they’ll resubmit their applications later this year.”

Both Samsung SDI and LG Chem have built new lithium-ion battery plants in China, hoping to participate in a quickly growing Chinese market, but it seems that along the way, something has gone wrong.

There is still time to ease the situation, if only Chinese government will have the good will to do so.

source: The Wall Street Journal

Categories: China, General

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38 Comments on "China Denies Battery Certifications For LG Chem, Samsung SDI"

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This is just the same old protectionism at work.

the offical is still waiting on a Brown envolope.

Red envelope.

Both correct. It is a red envelope inside of a brown envelope.

I’m sure envelopes were delivered. Apparently, the envelopes weren’t fat enough.

If you truly believe in free markets – you see this as a self-inflicted wound on China. I think China has a bit to fear from protectionist actions in response to this, and companies not developing the ability to compete, because they were protected for it.

Their own auto industry will be the ones who will suffer.

The same thing happened to the US when anti trade types tried to shut down import of Chinese solar panels. While they spent tax dollars propping up questionable local companies and imposed steep duties, our solar power installations flattened out while other countries gorged themselves on cheap Chinese solar panels.

It seems to be the same irrational, mercantilist story everywhere.

Yeah, but with an important difference. In the west this kind of policy is driven more by politicians fear of not being reelected than a genuine belief that the policy works. In China you need not worry about being reelected.

It is a communist government supported every time someone buys Chinese products.

Biggest question (besides from those raised in the article) so far would be if Panasonic was approved.

Bastards!

You forgot “Commie.”

Wow, could there possibly be any more obvious case of Chinese protectionism at work in the EV manufacturing business?

Sometimes I feel like an “ugly American” for criticizing Chinese cultural attitudes towards business.

But when I see articles like this… well, I don’t feel any hesitation about criticizing China’s ongoing strategy of using tariffs, taxes, and government regulations to block competition from foreign manufacturers.

Hard to say if it is protectionism or just corruption. Either is plausible.

It is all the above and more.

Why do you think the Chinese force automakers into a 51% Chinese owned JV? They want the IP.

Why must high tech products such as computer servers sold in China be certified as “Designed in China”? This is a recent ruling forcing American tech companies to teach them (more like hand them) design knowledge.

Steal it, hack it, blackmail for it. Then build it cheap, sell in China first, then sell back to the silly short-sighted Americans.

That’s why they are a Communist country, the government gets to do anything they want. Don’t like the rules, you can’t play. Grease enough palms and you can play again.

It’s run more like hybrid Oligarchical system with powerful members of an elite class, who agree/allow that privilege to be maintained by giving up personal power by investing it into members of the Politburo. A system that is by design is extremely susceptible to corruption, influence peddling, poor accountability, and a host of other social and economic problems for the vast majority of those who have no political power whatsoever. It’s a mess.
Certainly not a in depth analysis, merely a slight overview.

Are you talking about China or the USA? Honest question.

Outside of the “Politburo” reference, our political system is a mess. Corrupt by corporate interests which pay politicians to pass laws blocking competitors and protecting their oligarchy.

Agreed.

Serious problems in the U.S. to be sure. But I always ask myself, where would I rather live? The U.S. of course, and many Chinese answer that question the same way.

Agreed.

@ffbj:

That seems to be a good summary of the reality, at least based on my limited “round-eyed” understanding of what goes on behind the “bamboo curtain”.

Thanks.

Sure. Methinks something is rotten in the metropolitan region of Jingjinji.

Never be afraid to say what you believe to be right. Do not let the modern, PC police bully you into not speaking your mind for fear of being called an “ugly American” or a “racist” “bigot” “homophobe” “islamaphobe” or any of the other terms the PC police like to use to intimidate people into not expressing their opinions. When we give into this fear and intimidation, we lose our freedom.

Why would Tesla want to get involved in that kind of a mess?

Big monies, Joe.

Yes. But if there’s big money to be lost, I’m not so sure it’s worth the risk. It doesn’t seem to me like China is willing to let anyone make very big profits over there anyway.

On the other hand getting Tesla installed in China should speed up the process of the Chinese figuring out how it works and how it’s made, and thus bring on Chinese copy cats faster with better copies. That’s a good thing. Everyone steals, and always have, in the sense of copying/imitating others and building on their ideas. It’s the basis of progress.

Musk’s goal with Tesla has always been to speed up the transition to sustainable transport. Partnering with the Chinese, even if that results in them running off with Tesla’s IP, fits perfectly in that vision.

I don’t even know if Tesla has any IP to steal, they opened up all their patents.

time to ban all of their car parts and EV from the U.S.

China starting a trade war?

Starting a trade war? They’ve been engaged for some time. There’s an earlier comment regarding US blocking Chinese cheap solar. What wasn’t mentioned was the Chinese gov. subsidizing 50% of operational costs for every solar panel manufactured. China dumped illegally subsidized solar on our market and killed a large number of USA solar companies (Solyndra ring a bell).

Rich has clearly been paying attention.

Illegally subsidized? What law says China cannot subsidize the manufacture of solar panels?

Such a provision, if it exists at all, would be incredibly stupid. If the Chinese state wants to pay for our solar panels just so that they get to make them, why wouldn’t we? Put 5% of the savings we make into R&D and we’d end up with more solar panels, more money and more knowledge about solar panels than if we banned them because they were “illegally” subsidized!

The WTO has anti-dumping rules. Violation of these rules is called “illegal”. I suppose the definition of illegal gets muddied when you aren’t talking about laws of a sovereign country. But a country is not allowed to subsidize something and sell it at a loss to another country for the purpose of driving companies out of business. Of course communism/socialism gets a little murky with these things. Say the Chinese government says you must build 1 million panels this year and gives you money to do so and then you sell them on the cheap in the US, who is the victim? Well China is stupid for using their money to make our products cheaper. But the companies that make solar panels in the US are also victims. It is a complicated situation. When government gets involved in industry, then international competition gets complicated. Who doesn’t think the Japanese auto industry had a government sponsored advantage over the US auto industry way back when? The details matter of course and Japan wasn’t paying $5,000 for every Toyota that was made and then dumped in the US. So it wasn’t illegal. Arguably Boeing has a competitive advantage by its relationship with… Read more »

Terawatt asked:

“Illegally subsidized? What law says China cannot subsidize the manufacture of solar panels?”

International law. Treaties which China has agreed to. Specifically, the World Trade Organization which China has, if I read the Wikipedia article on U.S.-China relations correctly, only partially agreed to.

Still, they seemed to think their trade agreement with the U.S. was strong enough to make an official protest to the WTO when the USA slapped a tariff on tires imported from China.

“Sauce for the goose is sauce for the gander.” Except in this case, the gander (China) is getting a lot more sauce than the goose (USA)!

That locks in BYD as the biggest Monopoly there!

BYD is looking like a lock on sales in China. “Bring Your Dollars” as Uncle Warren has found out the hard way. This should be interesting, to see who can be the next big fish in the China Cabinet.