gettyimagesbank
Cautious optimism is growing in the Korean battery industry despite the reelection of former U.S. President Donald Trump.
The sector was once seen as the biggest victim of Trump's return to the White House, as he promised to lift regulations on internal combustion engine vehicles and revoke tax incentives for electric vehicles in compliance with the Inflation Reduction Act (IRA).
When he was on the verge of clinching victory, Wednesday, stock prices of producers of batteries and battery materials plummeted, indicating negative investor sentiment.
Considering the red states' reliance on the IRA to stimulate their economies and young Republicans feeling the need to protect the environment, however, Korean battery firms have said that there is a slim chance of the abolishment of the law under the incoming Trump administration.
Additionally, his hardline stance on China has been expected to benefit Korean battery firms, which have struggled to surpass their Chinese rivals, such as CATL and BYD.
“Trump's pledge of hefty tariffs is beneficial for Korean companies that have already invested in America,” the Korea Battery Industry Association said in a congratulatory message to the U.S. president-elect, Thursday.
“If the reduction in corporate taxes and electricity bills becomes a reality, the American subsidiaries of Korean battery firms will be able to improve their business environments.”
The association emphasized that Korean battery firms have created jobs and boosted economies in both the Rust Belt (areas of the U.S. midwest and northeast where factories are old and closed) and the Sun Belt (U.S. states in the south and west, from Florida to California) through their large-scale investments in those regions, which align with Trump's “manufacturing renaissance” vision.
“The Korean battery industry will make every effort to win support from Trump's new administration for the battery alliance between Korea and the U.S.,” the association said.
Lee Dong-chae, founder and executive adviser of EcoPro, a Korean battery materials maker, also told reporters last Friday that Trump's tariff barriers and protectionist policies could be a blessing in disguise for Korean companies.
“It will be much easier for outperforming companies to enter the U.S. market,” he said.
Tesla CEO Elon Musk, right, jumps on stage as he joins now president-elect Donald Trump during a campaign rally at the site of his first assassination attempt in Butler, Pennsylvania in the United States, in this photo taken on Oct. 5. AFP-Yonhap
On Sunday, it was reported that LG Energy Solution (LGES) was asked to supply batteries to SpaceX, an American space technology firm under the control of Tesla CEO Elon Musk, who played a pivotal role in Trump's win. LGES already supplies its products to Tesla.
According to industry officials, LGES has been developing a cylindrical lithium-ion battery that is likely to be used for the power supply of the Starship rocket, although the Korean firm declined to confirm the deal.
Amid the growing expectations for Trump's supportive policies for SpaceX, the space technology firm's latest partnership with LGES has been interpreted as proof of the possibility that the Korean battery industry will enjoy continuous growth under the incoming administration.