The Importance of Maintaining Vigilance During Korea’s 2-Year IRA Grace Period

Navigating the U.S. Inflation Reduction Act: A Race Against Time

A Tesla car charges at a Tesla Supercharger in Petaluma, California on May 2. LG Energy Solution supplies batteries to Tesla. [AFP/YONHAP]

[NEWS ANALYSIS]

Despite the U.S. government’s recent two-year grace period for compliance with its Inflation Reduction Act (IRA), Korean battery makers are still facing the challenge of transitioning away from Chinese supply chains while dealing with shrinking demand for EVs.

China’s dominance in certain battery materials like graphite, which can go up to 90 percent, poses a significant obstacle for Korean companies.

Shifting Supply Chains: A Necessary Move

Inflation Reduction Act in Washington on Aug. 2022. [EPA/YONHAP]” data-src=”https://koreajoongangdaily.joins.com/data/photo/2024/05/13/664e025b-86ad-412f-adf2-a56e34334961.jpg”/>

U.S. President Joe Biden speaks before signing the Inflation Reduction Act in Washington on Aug. 2022. [EPA/YONHAP]

Diversifying the Supply Chain: A Feasible Goal in Two Years?

The challenge of reducing China’s influence in the supply chain is daunting due to Korea’s heavy reliance on the country for essential battery materials.

Korean companies must explore alternatives as they look to secure critical materials like graphite from sources outside of China before the deadline.

Exploring Alternatives for a Graphite-Free Future

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

Preparing for a Future Without Graphite

As detaching from China in the graphite supply chain seems unattainable, Korean firms are turning their focus to alternative battery materials.

The emergence of silicon as a potential replacement for graphite offers the promise of faster charging times and increased energy density for electric vehicles.