South Korean Battery Makers Pressured to Develop Cheaper LFP Batteries

Firms face challenges in price competition and supply chain development amid U.S. subsidy uncertainties.

South Korean automotive battery manufacturers LG Energy Solution, SK On, and Samsung SDI are under pressure from clients to develop a more affordable type of battery chemistry, lithium iron phosphate (LFP), favored by their Chinese rivals.
The South Korean firms are hesitant to fully commit to LFP batteries as they can't yet compete on price and are concerned about slowing growth in electric vehicle sales and potential changes in U.S. subsidies.
LFP batteries made by Chinese suppliers like CATL and BYD are roughly 20% cheaper than nickel counterparts, making them attractive to automakers looking to cut costs and take advantage of U.S. electric vehicle subsidies.
New U.S. rules limit the amount of Chinese content in batteries eligible for credits, forcing automakers to source LFPs from non-Chinese suppliers.
South Korean firms are accelerating LFP development, but matching Chinese rivals in cost will be challenging, and building an LFP supply chain will take time.