South Korea cautions Joe Biden that his EV subsidy plan is in danger of ‘falling apart’

South Korea has issued a warning that China’s dominance in the global market for battery-grade graphite could jeopardize President Joe Biden’s ambitious green tech legislation. The Inflation Reduction Act aims to eliminate foreign entities with ties to Beijing from the US electric vehicle supply chain, but with Chinese companies controlling over 99% of battery-grade graphite, meeting the criteria for subsidies may become impossible.

South Korean Minister of Trade, Industry, and Energy, Ahn Duk-geun, expressed concerns that without exemptions for battery makers to source graphite from Chinese suppliers, no vehicles may qualify for the generous tax credits offered by the Biden administration. South Korean companies have already invested billions in advanced technology facilities in the US to take advantage of subsidies for semiconductor and battery manufacturing.

However, the future of these investments may be at risk if the IRA is modified or repealed by future US administrations. Additionally, Beijing’s controls on graphite exports could further complicate the situation. South Korean chipmakers are also facing challenges as their investments in the US could impact the country’s competitive edge in the semiconductor industry.

Despite these challenges, Minister Ahn emphasized the need for South Korean companies to expand overseas to meet growing demand for AI-related hardware. He highlighted the importance of trade diversification and positioning South Korea as a strategic partner for countries looking to reduce their dependence on China and Taiwan.

As tensions between the US and China escalate, the global supply chain landscape is shifting, and South Korea is navigating these changes to ensure its economic survival and competitiveness in the tech industry.