Chinese EV battery companies, which dominate the Chinese domestic market, are recently entering global market in earnest. The demand for Chinese batteries is also rising as the demand for batteries increases due to the rapid pace of EV conversion in major automobile markets such as Europe and the United States. As  the global market share of Chinese companies rises rapidly, the market share of Korean battery companies, which previously dominated the global battery market, is falling. As competition between Korea and China is expected to intensify in the global market in the future, it can be said that identifying the types and characteristics of Chinese companies’ global expansion and analyzing the strategies and competitiveness of major companies is essential to enhancing and maintaining the global competitiveness of the Korean battery industry.

Accordingly, this study aims to examine the current status of the Chinese market and the global competitiveness of Chinese batteries, and to understand the characteristics of each type of global expansion of Chinese companies. In addition, I selected China’s leading EV battery companies to analyze their strategies and competitiveness, and consider comprehensive countermeasures that the Korean government and companies can utilize.

In Chapter 2, to examine the development of the Chinese EV battery industry, I examines the Chinese market in terms of supply and demand, and identified the recent oversupply phenomenon that has emerged in the Chinese market. I also compared the level of competitiveness of the Chinese battery industry with that of Korea.

First of all, in terms of demand, China is already the world’s largest EV battery market, and battery demand is expected to grow continuously until 2025,  reaching more than 1TWh. In the Chinese EV battery market, the demand for LFP batteries compared to ternary batteries is increasing rapidly, and LFP batteries are used in 67% of Chinese EVs in 2023. On the supply side, CATL secures a majority of the market share in the ternary battery sector, and BYD and CATL occupy more than 70% of the market in the LFP battery sector. In addition, as the production capacity of batteries in China increases rapidly, the oversupply phenomenon in the Chinese market is intensifying. As a result, companies’ inventory pressure is increasing, plant utilization rates have dropped sharply, and some companies are experiencing deteriorating management, such as declining profit margins.

I then looked at the competitiveness of the Chinese battery industry in terms of price and technology. Chinese-made batteries have a higher price competitiveness than the batteries produced by Korean companies, and the decisive factor is upstream competitiveness. In line with this, many Chinese EV battery companies have succeeded in achieving strong price competitiveness by vertically integrating them from upstream units, the Chinese government has come forward early on. China’s pursuit of technology competitiveness is also fierce. While Korea has not yet perfected LFP battery and cell-to-pack technology, China has a significant technology level in this field, and Korea no longer has super-gap technology in the ternary battery field. Chinese companies have aggressively invested in next-generation batteries such as all-solid-state and hold a large number of patents.

In Chapter 3, the examples and characteristics of Chinese companies’ global expansion were examined. First, the types of Chinese companies accelerating their global expansion were classified into three categories: △ export expansion f exports in response to the increase in global EV battery demand △ local investment production in response to the battery supply chain internalization policy of major countries/regions △ transnational management using M&A.

I have examined the characteristics of each type in the text, and first of all, found that the export expansion type is  the most preferred way for most Chinese companies to respond to the demand in overseas markets so far by 2023. In particular, CATL ranks second in the global market outside of China through exports, and continues to narrow the gap with LGES, the No. 1 player. In the case of BYD, as exports of EVs expand, the usage of self-manufactured batteries installed in the vehicle body is increasing, and from October 2023, only batteries, not EVs, began to be exported alone. However, in the US market, it is expected that global expansion through exports will be limited due to discriminatory regulations such as IRA in the future. Next is the type of local investment production that has been promoted by a number of companies recently. Due to the rapid increase in demand for EVs in major automobile markets such as Europe and the United States, local production by automakers is in earnest, and in the process, automakers want to obtain a stable supply of batteries from a short distance. In addition, incentives for overseas production by Chinese battery companies are increasing as Europe and the United States are pushing for policies to internalize EV supply chains to induce batteries to be produced locally. Europe does not impose particularly discriminatory regulations on investment by offshore companies, including China, and EU member states such as Hungary are actively attracting offshore companies. As a result, many Chinese companies are actively planning to invest in Europe, and their total capacity plans in Europe exceed 300GWh in total. Like Europe, the United States wants to internalize the EV and battery supply chain , but the  difference is that  the U.S. wants to build its own capacity while excluding China as much as possible. The United States has defined all battery companies in China as FEOC. Despite these risks and costs in the U.S. market, Chinese battery companies have not completely abandoned their U.S. business, due to  huge demand in the U.S. market and huge amounts of battery production subsidies supported by the IRA.  Some Chinese companies, such as CATL and Guo Xuan Hi-Tech, are actively seeking alternative routes to enter the U.S. market. The third type is a method byin which some Chinese companies  attemp transnational management by diluting China’s nationality through M&As. Guo Xuan Hi-Tech and Envision AESC are representative examples, and they seek  to dilute a company’s  nationality  by trading shares with global automakers, and to expand global business by actively using the infrastructure, know-how, and networks that global companies already have. The two companies are the most active in investment production in the U.S. and Europe among Chinese companies, and global automakers are playing an important role in promoting overseas business.

In Chapter 4, representative Chinese companies engaged in global expansion were selected and their specific strategies and competitiveness were analyzed. In order to select a company, I compared the indicators for global expansion, such as the global market share of Chinese companies, overseas sales volume, production plan in the US/Europe/ ASEAN, and whether global automakers participate in the investment. As a result, CATL and Guo Xuan Hi-Tech were selected as representative companies. CATL, China’s largest and best battery company, is expanding its business to global markets such as Europe, the United States, and ASEAN through exports and overseas investment production, regardless of battery types such as ternary and LFP. CATL has secured price competitiveness through vertical integration of the entire supply chain, especially from raw materials to recycling, and is rapidly expanding its global battery business with a powerful weapon called "bang for the buck" by improving technological competitiveness with the full support from the Chinese government and generous investment in R&D.

Although Guo Xuan Hi-Tech does not have a large global market share outside of China, it is worth noting that it is the fastest-growing overseas business among Chinese companies, backed by  its major shareholder, Volkswagen. Guo Xuan Hi-Tech has been researching and developing LFP batteries for a long time and is expanding its overseas business focusing on LFP. The company’s LFP battery competitiveness can be seen as the best in the industry in terms of energy density, and it was found that LMFP battery technology, called the next-generation version of LFP, has made significant progress. The ternary battery sector is currently being researched and developed with Volkswagen, so it is necessary to observe its achievements. Guo Xuan Hi-Tech is securing price competitiveness by self-procuring core materials, and is planning to build production capacity of cathode and anode materials as well as battery cell production in foreign countries such as the United States. In particular, the company has received substantial support from a number of local governments in China, and is actively cooperating with the government  in the R&D field as well as tax cuts and subsidies.

Based on these analysis results, the following implications were presented to the Korean government and companies.

First, it is the implications for the Korean government. it is necessary to strengthen support for overseas businesses. In the future, the global expansion of Chinese companies is likely to be focused on overseas production rather than the existing mainstream export method. Korea also needs to expand its local production capacity, and since large-scale expansion requires huge funds, more active financial support from the Korean government is needed. In addition, it is necessary to devise measures such as strengthening lobbying activities so that Korean companies can continuously reflect the support benefits related to IRA manufacturing, one of the core interests of the U.S. business.

Second, the Korean government should be more active in strengthening upstream competitiveness because private sector capabilities are not enough. To this end, it is necessary to reorganize the relevant legal system to foster the Used battery industry in the short term, and to accelerate the establishment of an integrated management system for Used batteries that is currently being promoted. Additionally, from a mid- to long-term perspective, it is possible to increase diplomatic efforts with resource-bearing countries and actively utilize multilateral channels such as IPEF to strengthen the ability to respond to supply chain crises.

Third, as a basic way to prepare for competition with China, support for securing design and material technology should be strengthened. In particular, since securing precursor-related technology and manufacturing base is an urgent task to be carried out, the government can establish a specialized precursor education institution, and  the government can also establish a precursor company to support development, production. In the mid- to long-term, investment in basic science research should be expanded to secure core patents. It is necessary to actively utilize multilateral channels such as IPEF to strengthen cooperation with international standards and regulations related to batteries so that our technology can be expanded and applied worldwide.

Fourth, if our company is subject to discriminatory regulations abroad, we should also be able to take corresponding measures against companies in that country in accordance with the principle of reciprocity, and furthermore, we need to actively protect and foster our battery companies and industries within the scope of international regulations. In situations where regions/countries such as the United States, Europe, India, and ASEAN are promoting internalization of supply chains, there is a possibility that our company will be disadvantaged at any time. Our government also needs a map for emergencies, and we need to consider policy development based on the principle of reciprocity and ways to protect our companies.

Next, it presented implications for our company. First, it is necessary to actively utilize the IRA’s FEOC guidelines announced in December 2023 as leverage for public cooperation. In a situation where Korean battery companies are highly dependent on China in the upstream sector, gradual diversification of supply chains is more realistic than a sudden ‘De-Sinicization’. In the short term, the  ‘less than 25% of China’ clause can be used to establish joint ventures with Chinese companies in Korea, which is expected to greatly contribute to the  stabilization and internalization of the supply chain of Korean companies in the midium to long term.

Second, it is necessary to prepare countermeasures related to environmental regulations in Europe. As we have seen in the text, Europe is strengthening environmental regulations through the Battery Act. In order to cope with the regulations on carbon footprints, it is necessary to establish a system that can manage carbon emission-related calculation information, measurement standards, verification and monitoring in the upstream sector that depends on China. In particular, since most of the carbon emissions in the entire battery manufacturing process (LCA) occur in the upstream sectors such as raw material mining and refining, and the proportion reaches 50-70%, it is urgent to prepare countermeasures.

Third, it is urgent to secure technology and manpower in vulnerable fields such as LFP. Since  Korean companies have not yet  mass-produce LFPs and it is unclear whether they can be more competitive than Chinese-made products, it is necessary to shorten the time by importing manpower, equipment, and materials from China and stabilizing and internalizing technology rather than developing everything related to LFPs on their own. additionally, since China is considered  to be ahead of Korea in the fields of precursor manufacturing and battery recycling, it is also possible to consider ways to import key talents and know-how.  

국문요약

제1장 서론

1. 연구 배경과 목적

2. 선행연구와의 차별성

3. 연구의 구성

제2장 중국 전기차 배터리 산업의 발전 현황

1. 중국 시장 현황

2. 가격 및 기술 경쟁력

제3장 중국 기업의 해외 진출 유형별 사례와 특징

1. 글로벌 수요 증가에 대응한 수출 확대

2. 주요 국가･지역의 공급망 내재화 정책에 대응한  현지 투자생산

3. M&A를 활용한 초국적 경영

제4장 중국 기업의 전략 분석

1. 주요 기업 선정 방식

2. CATL

3. 궈쉬안하이테크

제5장 결론 및 시사점

1. 요약과 결론

2. 시사점

참고문헌

Executive Summary