The electric vehicle fervor that once gripped global markets seems to be waning, and South Korea’s battery industry is feeling the pinch. (Image courtesy of Yonhap)
SEOUL, Sept. 2 (Korea Bizwire) — South Korea’s battery makers, long buoyed by global demand for electric vehicles, are bracing for a sharp downturn after the United States abruptly ended tax credits for EV purchases, a move analysts warn could choke demand for Korean cells.
In a report released Sunday, the Korea Institute for Industrial Economics and Trade (KIET) said the “OBBBA” tax law, which took effect last month, accelerates the phaseout of EV purchase credits by nearly seven years, expiring at the end of September.
Without those subsidies, EV sticker prices are expected to rise, eroding demand for both cars and their core batteries.
The policy shift compounds an already difficult landscape. After European governments cut back EV subsidies, Korean suppliers’ share of the EU market tumbled from 63.5 percent in 2022 to below half, at 48.8 percent last year, while Chinese rivals, armed with cheaper batteries, expanded to nearly 48 percent.
The report urged Korean firms to pivot toward new growth engines such as energy storage systems (ESS), defense drones and humanoid robots.
Global ESS capacity is projected to surge more than tenfold, from 44 gigawatt hours in 2023 to 506 GWh in 2030, with U.S. demand set to climb further as ESS projects remain eligible for investment credits that no longer apply to solar or wind.
Meanwhile, rising defense budgets worldwide are fueling demand for high-density batteries to power military drones. Advances in artificial intelligence are also expected to accelerate development of humanoid robots, a sector that could become a natural outlet for Korean high-performance battery expertise.
“Amid intensifying competition between the U.S. and China in humanoid robotics, South Korea should leverage its battery strengths to deepen partnerships with the U.S. and secure a first-mover advantage in this emerging market,” the institute said.
Kevin Lee (kevinlee@koreabizwire.com)
