LG Energy Solution and Huayou Cobalt signed a joint venture agreement for battery recycling. (Image courtesy of LG Energy Solution)
SEOUL, April 18, (Korea Bizwire) — South Korea’s major battery manufacturers are delaying or scrapping joint ventures with Chinese companies as geopolitical risks, regulatory uncertainty, and market stagnation force a strategic rethink in the electric vehicle (EV) supply chain.
According to industry sources on April 17, LG Energy Solution has postponed construction of two planned battery recycling plants in China — one in Nanjing and another in Quzhou — developed under a 2023 joint venture with Huayou Cobalt, the country’s top cobalt producer.
The facilities, initially slated to break ground in late 2023 and begin operations by the end of 2024, have yet to begin construction. The slowdown, attributed to weakened momentum in the recycling market following a temporary demand plateau known as the “chasm,” has cast doubt on short-term viability.
“We’ve had to revise certain plans due to evolving market conditions,” said an LG Energy Solution spokesperson, though the company emphasized it remains committed to its partnership with Huayou Cobalt.
Other major ventures have been shelved entirely. A high-profile three-way JV between SK On, EcoPro Materials, and China’s GEM — intended to build a 50,000-ton precursor plant in the Saemangeum Industrial Complex by 2024 — was canceled. EcoPro cited prolonged demand stagnation and heightened uncertainty stemming from the U.S. Inflation Reduction Act (IRA) and Foreign Entity of Concern (FEOC) regulations as key factors.
Similarly, a nickel joint venture between POSCO Holdings and China’s CNGR has been put on hold. POSCO is now pivoting toward internal consolidation and upstream lithium investments.
LG Chem has also delayed the commercial launch of a lithium iron phosphate (LFP) cathode plant in Morocco, co-developed with Huayou Group subsidiary Youshan, pushing the start date from 2026 to 2027.
Analysts say the shift reflects growing caution over the evolving U.S.-China trade landscape. Under the IRA, EVs with battery components sourced from companies tied to foreign governments — particularly China — are ineligible for federal tax credits. The Trump administration’s reintroduction of aggressive tariffs and potential expansion of FEOC-related restrictions have further rattled Korean manufacturers with Chinese ties.
“If FEOC definitions are broadened, Korean companies connected to Chinese supply chains could also be affected,” said attorney Park Jun-mo of Yulchon LLC.
Yet experts warn that abandoning China entirely would be shortsighted. With China controlling vast reserves of critical minerals, long-term collaboration may still be necessary for supply stability once demand recovers.
“Battery companies are cautiously deferring investments amid policy ambiguity and market headwinds,” said Hwang Kyung-in of the Korea Institute for Industrial Economics and Trade. “Most are waiting to reassess once the post-chasm environment becomes clearer.”
Ashley Song (ashley@koreabizwire.com)
