The biggest beneficiaries of "announcement of detailed IRA regulations" are POSCO Holdings and 'E-stock'
The United States has announced detailed regulations on electric vehicle subsidies under the Inflation Reduction Act (IRA). To benefit from the subsidy, battery components from 2024 and battery key minerals from 2025 must not be sourced from Foreign Groups of Concern (FEOC).
Groups of Foreign Concern (FEOC) include four governments: China, Iran, Russia, and North Korea. Among these, the detailed regulation that Korea, which has a lot of joint ventures with China, should pay the most attention to is the regulation that the stake in Chinese companies should not exceed 25%.
‘This is why’ it is positive for Korea
Accordingly, joint ventures between China's CATL and America's Ford and CATL and Tesla are all problematic. This also affects domestic companies. In fact, to conclude, it is positive for Korea.
Even if Tesla and Ford make equity investments and CATL only transfers technology, if CATL uses Chinese products for battery parts and core minerals, it will not receive IRA tax benefits.
Therefore, Korean companies in North America include LG Energy Solution, which produces the most, as well as Samsung SDI and SK On, and there is a possibility that LG Energy Solution will steal a significant amount of CATL's volume.
The Korean company that benefits is ‘here’
As for precursors, it seems likely that Eco Pro Materials, which is overwhelmingly number one in Korea, will absorb a significant portion of China's production volume in the United States.
In addition, companies that will benefit in 2024 include SK iTechnology in the separator side, Enchem and Dongwha Enterprise in the full amount side. Next is POSCO Holdings, which processes lithium.
In 2025, cathode and anode materials will benefit, and I think the most aggressive companies like POSCO Future M and LG Chem in North America will be the most aggressive.
What was of concern was SK On and LG Chemical, which have a high Chinese stake, considering their joint ventures with China. However, I think that SK On will actually benefit if it adjusts its share ratio.
The reason is that the Ford F-150 pickup Lightning, for which SK On makes batteries, is on the rise, selling 4,400 units in November, an increase of nearly 20% compared to the previous month.
Fortunately, LG Chem, which is in a joint venture with China's Huayu Cobalt, has already anticipated America's actions and is planning to increase LG's stake to 75%.
The same goes for POSCO Future M. The precursor Huayu Cobalt joint venture has an excessively large difference of 20:80 between POSCO Future M and Huayu Cobalt, and there are currently plans to increase the stake in POSCO Future M to more than 65%.
Additionally, Tesla in the U.S. will receive batteries from CATL for 20% of its U.S. sales in 2023, and I believe this will all be transferred to LG Energy Solutions.
What is more positive is that if Samsung SDI develops the 4680 cylindrical battery cell, there is a possibility that the quantity will be divided between LG Ensol and LG Ensol.