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China’s JAC Motors halts production of electric SUV with Korean batteries

2016.07.12 11:38:36 | 2016.07.12 16:43:02
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One of China’s state-owned automaker has stopped manufacturing an electric vehicle powered by cell batteries of Samsung SDI after the Korean battery maker failed to join the list of battery suppliers eligible for subsidies from the Beijing government. The Korean business and industry observers, however, worry about a political motive behind the move amid jitters about Beijing’s exercise of clout to protest to the latest decision by the South Korean government to deploy U.S.-led anti-missile system.

According to Bloomberg News and Samsung SDI on Tuesday, Anhui Jianghuai Automobile Co. or JAC Motors has recently halted production of its all-electric sport utility vehicle (SUV) iEV6s which has been selling from March with high price tag of 234,000 yuan ($34,898) per unit for its performance to drive up to 251 kilometers (160 miles) on a full charge. Samsung SDI was chosen by JAC Motors as the exclusive supplier for its first pure electric vehicle. The iEV6s is equipped with 3,000 of Samsung SDI’s high-performance 18650 cylindrical battery cells that are supplied from the company’s plants in Korea and China. Under the original contract, it would have ordered 50 million battery cells this year alone.

Sales of iEV6s have not met up to expectations, selling 1,858 units from March to May, below its target of 1,000 to 2,000 units a month.

The Chinese company explained that it suspended production of iEV6s due to the fear of becoming ineligible for government subsidies as the Korean battery makers Samsung SDI and LG Chem had failed to receive certifications for their batteries from the China’s Ministry of Industry and Information Technology. The two companies plan to reapply for the fifth round that is scheduled in the next month. JAC Motors worries inevitable spike in the car price if it cannot get subsidy for the battery that makes up the bulk of the cost in electric vehicle. The carmaker plans to put production at hold until it is clearer about battery policy. Its iEV6S won’t have the performance it originally boasted without Samsung SDI’s high-performance battery cell that is as small as the size of an index figure with powerful energy capacity of around 3,000 mAh to make the car lighter and drive range longer on a charge.

Beijing has not been clear whether it will stop subsidies if batteries do not meet up to its new guidelines.

The Korean industry, however, is fretful of bigger political factor. Despite China’s strong protest, Korea and the U.S. recently decided to deploy the Terminal High Altitude Area Defense in South Korea for greater deterrence against North Korea’s nuclear and missile threats. Beijing is concerned that the country would fall under the surveillance of the system that is equipped with a powerful radar system.

By Lee Seung-hoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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