South Korea announced Friday that it would provide its battery producers with 7 trillion won ($5.32 billion) over five years to invest in North American infrastructure to assist them in dealing with the U.S. Inflation Reduction Act.
The industry ministry said the government would decrease lending rates and insurance premiums by 20% and provide additional loans and tax credits for the area’s Korean battery and material production facilities.
This week, the U.S. Treasury Department tightened E.V. tax regulations, forcing manufacturers to obtain a set amount of essential minerals for E.V. batteries from the U.S. or a free-trade partner to qualify for new government incentives under the Inflation Reduction Act.
For a $3,750 credit, battery components must be produced or assembled in North America, and 40% of essential minerals must be obtained from the U.S. or a free trade partner.
“Both the government and companies should work to find solutions together to effectively cope with conditions changing swiftly after the Inflation Reduction Act,” Trade Minister Lee Chang-yang said while presiding over a meeting with key battery cell and materials manufacturers.
South Korea created the government-backed battery alliance in November to improve metal sourcing from China and stabilize battery supply chains.
L.G. Energy Solution Ltd (LGES) (373220. K.S.), Samsung SDI Co Ltd (006400. K.S.), and SK On are three of the world’s five largest E.V. battery cell producers, providing Tesla Inc (TSLA.O), Volkswagen AG (VOWG p.DE), and General Motors Co. (GM.N).
LGES said in March that it would invest $5.6 billion in Arizona to restart a delayed U.S. battery project to get Inflation Reduction Act subsidies.
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