Korean media: "Both price and technology are at a disadvantage". It is unrealistic to get rid of Chinese graphite!

On June 24, the South Korean media Business Post published an article saying that the US government has set a grace period to temporarily provide tax relief under the Inflation Reduction Act for batteries containing Chinese graphite, but from the perspective of battery enterprises, the effectiveness may be low.

Since the price competitiveness of Chinese graphite companies is very high, and battery manufacturers must compete for a limited number of non Chinese products, it is difficult to meet the tax credit requirements of the Inflation Reduction Act.

Recently, the Financial Times quoted battery industry experts as saying, "By 2027, it will be difficult for enterprises from other countries to replace China's graphite supply chain."

The US Treasury Department recently postponed the tax relief limit of the Inflation Reduction Act for electric vehicle batteries containing Chinese graphite from 2025 to 2027 for two years.

This reflects the requirements of enterprises, that is, it needs additional time to replace China's graphite, which accounts for more than 90% of the supply chain. Three Korean battery companies, LG Energy Solutions, SK On and Samsung SDI, also expressed their opinions on the suspension to the US government.

When the decision of postponement was made, it was expected that battery companies would be able to get rid of China's graphite supply chain, but some analysts believed that this prediction was simply unrealistic.

The Financial Times explained that "if the grace period is not further extended, the number of electric vehicles receiving tax credits will decrease."

The analysis is based on the fact that battery enterprises focus on the construction of lithium, nickel and cobalt supply chains with high added value, while less investment is made in graphite, the main raw material of anode materials, leading to a high dependence on China at present.

Some analysts also believe that Chinese graphite enterprises will use price competitiveness to curb graphite mining and smelting enterprises in other countries and squeeze them out of the market.

In addition, battery companies in South Korea, Japan and the United States must compete for limited non Chinese graphite, so the supply is tight.

Sam Adham, battery expert of CRU Group, a global raw material consulting company, said: "The graphite enterprises outside China lag behind China in both technology and price. Their products are not only supplied to the United States, but also to battery manufacturers in Europe, Japan and South Korea. Therefore, the two-year grace period of the Inflation Reduction Act is not enough."