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Expert column
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: 2 : coex : Tue, 19 November 2024, 12:00 AM |
| The Importance of Strengthening the Material Supply Chain in the Battery Value Chain - Jaebum Park, Senior Principal Researcher, POSCO Research Institute |
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The Importance of Strengthening the Material Supply Chain in the Battery Value Chain ✍🏻 POSCO Research Institute Jaebum Park, Senior Principal Researcher The electric vehicle market is facing hurdles, caught between the chasm and concerns of fire hazards. The secondary battery industry, which has enjoyed rapid growth, is also encountering a cooling phase. This is an inevitable growing pain; without overcoming it, the future remains uncertain. However, If this period of market stagnation is used as a ‘time of accumulation’ to shift from quantitative to qualitative growth, it can be an opportunity in disguise. While quantitative growth builds ‘size,’ qualitative growth strengthens both ‘stamina and constitution.’ Key elements for qualitative growth include securing core technologies, innovating mass production processes, and launching differentiated products, but the foundation lies in establishing a robust supply chain. This challenging time could become meaningful for building a sustainable and risk-mitigated supply chain in the battery sector. China's dominance in the electric vehicle and secondary battery sectors is already overwhelming. How did this happen? Barely a decade ago, things were different. China rose as the world’s largest EV market in 2016, having nurtured its domestic battery value chain through exclusive subsidies from the early 2010s. Leveraging this foundation, China has steadily increased its competitive edge and influence on the global supply chain, particularly in EV, battery, materials and critical minerals. It’s no exaggeration to say that China has constructed a Regional Value Chain (RVC) within its borders, reaping first-mover advantages.  Interest in electric vehicles is also growing in the U.S. and Europe. However, as the EV and battery markets expand, dependency on China will intensify due to its existing dominance in critical minerals and battery materials within the global supply chain. Even if the U.S. or Europe attract foreign manufacturers like Korean companies or foster domestic players, long-term dependence on specific countries or companies for raw materials will inevitably pose problems. History has repeatedly demonstrated this risk. With concerns over U.S.-China tensions, rising tariff barriers, and a weakened WTO system, the global supply chain is increasingly fragmented, and the battery industry is no exception. The Global Value Chain (GVC) in battery is under threat, transitioning toward a Trusted Value Chain (TVC). The importance of metals and materials in secondary batteries extends beyond cost considerations. Proper combinations of these materials, coupled with advanced technologies, can produce differentiated products, potentially reshaping the market as game-changers. This was true when NCM cathode materials were commercialized, and now, LFP is expanding its influence similarly. Critical minerals and battery materials serve as the starting point for competitive differentiation and further, as the springboard of innovation. Of course, collaboration with China remains essential. The goal is not to sever all ties with the Chinese supply chain but to reduce excessive dependency and strengthen the value chain with domestic companies. This requires wisdom and collaboration between the government and corporations. |