China has rejected battery certification applications from Korean giants LG Chem and Samsung SDI, reported the Wall Street Journal.
The move could effectively shut out the two electric vehicle (EV) battery manufacturers from the China market as early as 2018.
The decision by China’s Ministry of Industry and Information Technology (CMIIT) comes as Chinese authorities consider limiting state subsidies to only those EVs using certified batteries.
The lack of certification could see subsidies, which account for up to 40% of the price of a new EV in China, lost within the next two years.
Meanwhile, it was reported that 31 Chinese battery makers had their applications for certification accepted, including Microvast.
China has already suspended consumer subsidies for electric buses using batteries with a combination of nickel, cobalt and manganese.
LG and Samsung said they haven’t been notified of the reasons for their exclusion, said the report. However, both companies are said to be planning to resubmit their applications later this year.
The move will come as a blow to LG Chem and Samsung SDI as they hoped to tap into a market where the government wants five million electric cars and buses on the road by 2020.
The latest news, depending on how you read CMIIT’s decision, may also dampen Korean battery makers SK Innovation’s enthusiasm to build an electric vehicle battery plant in China.