Chinese firms seek South Korean partners to skirt U.S. EV rules

Chinese firms are lining up to invest in South Korea’s battery industry because they want to use it as a gateway to the U.S. market, undermining Washington’s efforts to limit China’s involvement in the electric car supply chain.

Over the past four months, Chinese companies and their South Korean partners have announced some 5.1 trillion won ($4 billion) of investments in five new battery factories in South Korea. And at least one local government is in talks for more projects, officials from the Saemangeum Development and Investment Agency say.

The Chinese — and South Korean — firms are looking to take advantage of South Korea’s free-trade agreement with the U.S., considering batteries made in South Korea and then installed in U.S.-made electric cars will likely qualify for tax breaks under U.S. President Joe Biden’s Inflation Reduction Act (IRA).