EV Battery Maker Calls for Cheaper EU Energy to Counter China

(Bloomberg) -- The South Korean owner of the European Union’s largest factory of electric-vehicle batteries called on the bloc to reduce energy costs and grow the strategic industry amid stiff competition from China.

LG Energy Solution Ltd’s facility near Wroclaw, Poland, has been operating at about half of its capacity this year due to weaker global demand for EVs, which has battered Europe’s automakers.

The EU is preparing stricter carbon footprint regulations at the same time as Chinese producers of EV batteries and electric cars are increasing their presence on the continent, according to LG Energy. Therefore, the bloc — and in this case the Polish government — should prioritize giving access to cheap electricity to key growth industries, such as making EV batteries.

“If Poland wants to build advanced industry it needs to connect cheap electricity where the business is generated,” Yong Girl Lee, head of external relations at LG Energy Solutions, said in Biskupice Podgorne. “You can’t provide cheap power for everyone. It can’t be done.”

Poland tends to favor shielding households, not industries, from high costs of electricity and natural gas. The country has one of the EU’s highest power prices because of its dependence on burning coal, which stokes costly carbon emissions. 

For now, LG Energy Solutions is adjusting to the weaker EV market. It plans to start making more affordable lithium-iron-phosphate batteries for energy storage from 2025 and for cars from 2026. The plant’s utilization could rise from the second half of next year, with car batteries still accounting for vast majority of the output, Lee said.

‘Need to Act Quickly’

LG Energy’s factory, which alone was responsible for 3% of Polish exports in 2023, uses about 1 terawatt hour of electricity a year, buying power via direct agreements with renewable energy producers as well as on the market. 

It wants the Polish government to allow firms operating within 14 special economic zones across the country to get priority in receiving cheap and green energy, especially as power usage is set to grow with the rise of automation and expanding data storage.

Without this, competing with Chinese firms could be difficult for firms in the EU. The fact that the bloc is working on new battery rules, which are expected to impose tougher carbon footprint requirements for producers, adds to the urgency.

“Chinese producers are competitive, that’s why we — as Europe — need to act quickly,” Lee said. “The Polish government needs to think how to safeguard such an important and strategic industry.”

©2024 Bloomberg L.P.