SK Innovation Halts Battery Plant Construction In China After Samsung SDI And LG Chem Hit Hard

DEC 29 2016 BY MARK KANE 41

It has been no secret that the Chinese government has sowed the seeds of uncertainty among lithium-ion manufacturers wanting to produce conventional lithium batteries in the country.

Especially hard hit so far have been LG Chem and Samsung SDI, which both have established new battery plants, only to later realize they weren’t certified to fully utilize Chinese subsidies and market opportunity.

SK Innovation battery cell

SK Innovation battery cell

Now, a third South Korean battery maker, SK Innovation that was planning to come to China, has postponed its plans for battery production in the country as a result. (That plan was announced in April with Beijing Automotive Group and Beijing Electronics).

Coming as no surprise as to the reason for the postponement? Regulatory uncertainties are cited as a major reason.

Additionally, new draft certification rules by China’s Ministry of Industry and Information Technology issued in late October complicated things further, as the draft raised the minimum production capacity 40 fold – from 200 MWh to 8 GWh for battery manufacturers to be put on a list of approved producers, and thus eligible for subsidies.

Market research firm SNE Research told Reuters that both Samsung SDI and LG Chem would not meet the new threshold this year, and that it was likely only China-based BYD and Amperex Technology would hit the mark.

SK Innovation's lithium-ion battery manufacturing process

SK Innovation’s lithium-ion battery manufacturing process that doesn’t come to China

source: CCFA

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41 Comments on "SK Innovation Halts Battery Plant Construction In China After Samsung SDI And LG Chem Hit Hard"

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I bet Tesla and the LG Chem factory in Michigan feel really good right now the fact they don’t have to worry about this mess by building in the US.

The reality is China can make any rules that it wants whenever it wants.

Partnering with China is a bit like being a street-walker from Limehouse dating Jack the Ripper. Eventually your throat will be cut.

The rug can certainly be pulled out from underneath anything associated with green energy in the United States.

Perhaps you don’t know that there’s going to be new political power running the US government on January 20, 2017? Many of those appointed to the highest levels of government are pro-oil and anti-green energy and emission controls.

It doesn’t take a big stretch of imagination to foresee attempts to inhibit batteries, solar, or other green technologies that might compete or threaten the entrenched fossil fuel industry.

Chinese removal of subsidy is not due to change in green attitude, but they want to give advantage to Chinese companies. If you apply that logic to US, they’d want to support EV since US companies make the best EV in the world.

Too often, people emphasize minor green attribute of EV, but not so much “made in USA” aspect. I wonder how many people know that Tesla is US company like Chevy, not some exotic European company.

If a roughly five fold improvement out of the gate with the potential for complete sustainability is a minor green attribute, I’m excited to see the major green attributes. 🙂

If you’re talking about purely from theoretical energy use standpoint, what you say is true. But if you’re talking about theoretical, EV can drive entirely on renewables, so it could be infinitely better.

But the reality is entirely different. You travel more than just on cars; many people (or most people I know) travel more on planes than cars.

In addition, to have any kind of impact, you have to convince most people to switch to EV. Looking at the sea of SUV and trucks in my commute, all of them solo drivers, that’s not likely any time soon.

Speaking of giant SUV/trucks, damn those things are annoying. I can’t see the car in front of them which means I have to keep longer distance. Then another giant SUV/truck slots in the space, making me drop back even further.

SparkEV said:

“…many people (or most people I know) travel more on planes than cars.”

It’s truly amazing how the one-percenters have such a different view of the world than the 99% of everybody else.

Reality check: The average American car is driven about 15,000 miles per year. Since that’s the average, clearly some are driven much farther than that. By comparison, 15,000 miles of air travel would be more than 6 direct flights from New York to Los Angeles.

Most people I know just commute, putting on under 10K miles a year with their car. If you look at Leaf lease returns, they average about 7K miles a year.

Most people I know jet-off to far away lands twice a year, putting on 24K miles easily (6K miles each way). It’s not the realm of the 1% of US to take twice a year vacation to Asia / Europe / Australia. It seems teachers do this far more than other professions.

In a related note, talk to the females of under 40 years of age. Practically every single one of them love to travel to far away lands, and they travel even if they’re making almost minimum wage.

SparkEV said:

“Most people I know jet-off to far away lands twice a year…”

Thank you for confirming what I said about you being in the 1%, not the 99%.

The best way to travel is with no money in your pocket.
No 1% required. An open mind helps mate

How come a high proportion of visitors to Australia, travelling long distances, are backpackers then?
Are they in the 1%? Or, as another commenter said, teachers? Thinking you have to be rich to travel by air is a nonsensical fallacy, as proven by growth in air travel since the days when your claim WAS true- the 1930’s!

As much as many want a trump to be a Horrible monster, he’s not stupid. Or he wouldn’t be where he is.

Green industries have reached a level of momentum where they’re not going to be stopped. They are also one of the few economic sectors where there is real job creation. And Elon Musk is a tech advisor to Trump.

Well, it might be time for some interesting, revealing, and even – hard questions for Elon next week! “Tesla CEO Elon Musk to participate in Q&A at a Gigafactory event for investors next week” – Basically – “Back in October, we reported that Tesla invited investors to a special event at the Gigafactory on January 4th. This week, Tesla sent out the official invites and confirmed that CEO Elon Musk will be there for a talk with management, including CTO JB Straubel. Our understanding is the focus will be on touring the factory, which recently doubled in size, and not on access to management.” “Tesla is supposed to start producing second generation Tesla Energy products, the Powerwall 2 and Powerpack 2, in volumes during the first half of 2017 and the Model 3 production will add to the battery demand during the second half.” “Finally, we recently revealed that Tesla is expanding the manufacturing scope of the Gigafactory with highly automated drivetrain production lines. The factory was only supposed to manufacture battery cells and packs at first, but now Tesla is apparently expanding to drive units.” So – Elon is starting of January 2017 with a ‘Bang’ (Hopefully not… Read more »

Hey Robert,

Looking like early February ATM for first installs on PW2

With all the pollution and smog in China I can see why they would increase production threshold…China is serious.

“China can make any rules that it wants whenever it wants.”

This is a fact that seems to be lost on some business leaders.

So can any nation. But if a country acts in an arbitrary and capricious manner, it will ultimately backfire on them. Just ask Venezuela.

A legislature takes time to consider all interests, that could take years if ever. China can change tomorrow with no notice nor reason.

It is a mystery to me why any business with proprietary processes would go to China anyway. China requires them to partner with a local company so the locals can steal the process, and we are then dumb enough to buy it from the Chinese since it is cheaper {in more ways than $ price}.

American executives are greedy and short-sighted thanks to stock-based incentives.

You get rewarded for increasing profits. Best way to do that is build/outsource to China.

First, the Chinese government will force you to hand over the IP. Examples:

1) Auto manufacturers forced into local partnership as Mark C mentioned above.

2) Super computer manufacturers prohibited from selling in China without a “DESIGNED by Chinese” certification. It’s no longer enough to build computers there, now we have to teach them.

Next, once local companies have mastered the knowledge and produced their own products, new laws will be put in place to disadvantage foreign manufacturers.

> Next, once local companies have mastered the knowledge and produced their own products, new laws will be put in place to disadvantage foreign manufacturers.

They will behave exactly like how the Japanese behave, and then come and put manufacturing plants in the US, or buy them outright.

The Americans under previous administrations allowed it. Reagan after his Presidency, went to Japan and gave two speeches for 1 million dollars each. It was payback for all the policies he supported that allowed Japanese companies to gain in the US.

You’ve got it backwards about the speeches.

When Reagan took office Japanese car imports were crushing the US auto industry. Reagan negotiated “voluntary” restrictions (his free-trade supporters were aghast). Sentiment continued to build against Japan, though, and by the time he left office relations were quite strained. The 10 days of meetings, appearances and speeches were an attempt Japanese business leaders to improve relations (they probably thought Reagan had pull with his successor). It was certainly not a “thank you” junket.

> You’ve got it backwards about the speeches.

And yet you provide no explanation why someone would be able to give two speeches for a MILLION DOLLARS EACH to a foreign nation, that is one of the US’s biggest trading partners, and just right after he was in office.

Yeah, they gave it too him because they liked his jet black hair.

All ex-presidents command astoundingly high speaking fees. I’m puzzled that you’d single out Ronald Reagan here.

In the recent presidential campaign, the GOP tried to make hay out of high speaking fees given to Bill Clinton — and Hilary, too; insinuating that there was something “wrong” with that, or that such high fees indicated collusion with the Russians.

I admit I don’t understand why any organization would pay anyone such astoundingly high fees for one speech, or a few, even to an ex-president… or in the case of Hilary, an ex-First Lady. But like it or not, the fact is that it’s common practice. So trying to make that the basis for a conspiracy theory — any conspiracy theory — seems pretty silly.

Sorry, you did say “improve relations”.

I just finished reading Independent Observor comment, but responded to your comment, by grabbing that first line of yours.

Harley Davidson is a drop in the bucket.

I remember seeing Frontline documentary, where American TV manufacturers where sold out to the Japanese using various legal, and illegal techniques (involving Swiss bank accounts).

It should be illegal. Politicians should not be allowed to give such speeches for money, after leaving office. Even your comment of improving relations, just shows you, that it is wrong. It’s influence peddling, and a conflict of interest.

In addition to Doggy’s comments, Reagan’s team instituted protections / tariffs, on Japanese motor cycles to prop up Harley Davidson who at the time was mismanaged by AMF into the a shallow grave. Many of free traders were upset with Reagan, as the people who bought Harley’s were a different market than the ones who bought Honda’s, Kawasaki and Yamaha cycles. It was viewed negatively by many Republicans at the time, although had some union support at Harley. Not sure where Alpha is getting his information on this one.

Alpha is an avid Alt-Righter so he is getting his propaganda (usually false) from places like Breitbart.

Aka, fake news.

You do realize that Reagan was a Republican president? So your idiotic accusation makes no sense.

If Ronald Reagan were alive today, he wouldn’t be a Republican, he’d be a Democrat. It’s not at all surprising that those on the Hard Right who feed fake news to Breitbart would take aim at the memory of Ronald Reagan, because according to their warped yardstick he’s now considered a “liberal”.

And, AlphaEdge, this isn’t the first time you’ve shown that your mind is made up, and you refuse to be confused by the facts. That was quite noticeable when you repeated various fake news stories about the Clinton Foundation. You were refuted by actual facts, which you utterly ignored.

It’s really sad when people start believing their own lies. It’s quite troubling, and destructive to democracy, when they start voting based on those lies.

Mark C said:

“It is a mystery to me why any business with proprietary processes would go to China anyway.”

Well said, sir.

The short-sightedness and destructive results of emphasizing short-term profits over long-term soundness in a business, or even survival, have had and continue to have far-reaching consequences.

This is the problem with whimsical Chinese decisions to dictate market forces.

China doing whats best for China nothing wrong there…
But when China looks at the western world they see politicaly correct cowards who wont stand up and who will do anything for a short sighted dollar…

Are you saying the communist system is better for a country than capitalism?

“The last capitalist we hang shall be the one who sold us the rope.”

A great quote which, unfortunately, can’t be accurately attributed to anybody.

China stopped being a communist county decades ago. They are a corporation now.

Yep China is only sudo commies now but they are probably bigger capatalistit than the west…
China does what is best for China as a whole though while the US lets them have a different set of rules for trading that screw the US and Wahington rolls over and says thank you…

jelloslug said:

“China stopped being a communist county decades ago. They are a corporation now.”

Yes, I think China is moving, or has moved, from being totalitarian communist to economic fascism.

An inherent aspect of fascist economies was… an economy where the government exerts strong directive influence over investment while often subsidizing favorable companies, as opposed to having a merely regulatory role. In general, apart from the nationalizations of many industries, fascist economies were based on private individuals being allowed property and private initiative, but these were contingent upon service to the state.

Please… lets check our buts, before screaming like “u stink nah nah” like a kid

Protectionist measures are every where , due to political reason or economical reasons, what ever. Any Govt when spending its tax money, they want to benefit their own, my money, my people period.

South Carolina state subsidizes, plugin hybrids( just volt and ford) not bevs as earlier BEVs are from foreign companies like Nissan,(Tesla is exception) five years back. Now there are lot of plugin hybrids in market

“Protectionist measures are every where…”

Not like China practices, they aren’t. That’s a false equivalency. It’s like saying the driver who drives 5 MPH over the speed limit is just as bad as the drunk driver who hits another car and kills an entire family, because both are violating traffic laws.

The more China imposes these arbitrary, protectionist rules, the more companies are going to “vote with their feet” as far as investment dollars and jobs created. If China doesn’t want foreign investors to build factories there, I’m sure there are plenty of other countries which will welcome them with open arms.

In fact, as an American who hates the way
China has been getting away with unfair trade practices, I hope China ratchets up these policies to an even higher level. I’d love to see more and more investment capital go to countries other than China, as well as the jobs those investments create.

China may not be an outright enemy of the USA, in the military sense — not yet, altho it seems to be moving that way — but it certainly is a rival! It’s far past time we started treating them as such. I don’t agree with Trump on much, but on that I hope he actually does deliver on his campaign promises.

Trouble is, by the time our companies move out of China, the Chinese will have all of our technology, molds, tools, machinery, etc., to cheaply produce the same products, undercutting our ability to fairly compete with them in the world market.
As for Trump, I will bet on the Lottery as a better deal.