SEOUL, Aug. 7 (Yonhap) — South Korea’s export of cathodes, a key component of secondary batteries, to the United States skyrocketed in the first seven months of the year compared to the previous year, fueled by rising demand for electric vehicle (EV) cells and the US Inflation Reduction Act (IRA).
According to data from the Korea International Trade Association (KITA), outbound shipments of cathode materials to the US totaled $1.83 billion in the January-July period, a staggering 177.8% increase from the $661 million reported in the same period of 2020.
Cathodes are one of the four components used in lithium-ion batteries, along with anodes, separators and electrolytes. Cathodes are responsible for the power of EV batteries and take up around 40% of the total production costs.
KITA data also revealed that cathode exports to the US only amounted to around $9 million in early 2021, before skyrocketing to $57 million in the same year. The value of monthly shipments surpassed $100 million in May 2021 and exceeded $200 million in January of this year, eventually reaching a record high of $326 million in March.
The rapid growth in cathode exports is largely attributed to the enactment of the IRA in August 2020, which provides up to $7,500 in tax credits for purchasing EVs assembled in North America. The IRA requires a certain portion of EV batteries to be made with minerals mined or processed in the US or countries or regions with which the US has a free trade agreement.
South Korean battery makers have been taking advantage of the IRA requirements by forming partnerships with EV makers. LG Energy Solution Ltd. has battery manufacturing facilities operating or under construction in Ohio, Tennessee and Michigan in a venture with General Motors Co., while SK On Co. has two factories running in Georgia and is building three others in Kentucky and Tennessee with Ford Motor Co. Samsung SDI Co. is also constructing two battery plants in the US with Stellantis N.V.