Korean auto, cathode materials exports to U.S. surge amid growing EV demand

[Photo by Han Joo-hyung]

South Korean exports of automobiles and cathode materials to the U.S. have surged sharply in the past year as demand for electric vehicles and other environmentally-friendly cars has grown in the country.

According to the Ministry of Trade, Industry and Energy and the U.S. Department of Commerce on Monday, exports of Korean-made vehicles, including their components, to the U.S. reached $9.5 billion in the first quarter this year, up 31.9 percent from $7.2 billion a year ago.

Exports to the U.S. have been on a rise since last year, driven by an increase in shipments of high value added vehicles such as EVs and sport utility vehicles (SUVs).

Exports stood at $8.2 billion in the second quarter, $8.5 billion in the third quarter, and $9.6 billion in the fourth quarter.

Demand for Korean cars in the U.S. has gone up.

According to the Korea Automobile & Mobility Association and market data tracker Wards Intelligence, Korean-made cars accounted for 10.7 percent of the entire U.S. car sales in the first half of this year, up 0.3 percentage point from the same period a year ago.

Korea is the only country to see an increase in its share during the period.

American cars accounted for the largest share of vehicles sold in the U.S. in the first half of the year at 44.3 percent, followed by Japanese cars 35 percent, and European cars 9.8 percent.

In line with thriving exports of Korean cars to the U.S., demand for cathode materials, a key material for secondary batteries, is also on a rise.

According to the Korea International Trade Association, Korean exports of cathode materials to the U.S. stood at $1.84 billion in the first seven months of this year, up 177.8 percent from the same period last year.

Korean cathode exports to the U.S. stood at $9 million in January 2021 but rose more than sixfold to $57 million in January last year. Exports surpassed the $100 million mark in May last year and topped $200 million this year. It hit an all-time monthly high of $326 million in March.

Industry experts say that Korean cars are greatly benefiting from the Inflation Reduction Act (IRA). Initially, there were mounting concerns that exports of Korean cars would be hurt by the introduction of the IRA.

However, Korean companies’ focus on the commercial market eligible for tax grants, including leasing and rental, has proven a success.

The increase in exports of cathode materials to the U.S. is also greatly attributable to the IRA.

Under the IRA, only cathodes produced in free trade agreement (FTA) partners of the U.S. are eligible for tax benefits. This gave Korean cathode materials a competitive advantage over Chinese peers, according to industry insiders.

Korean cathode exports to the U.S. were also lifted as the secondary battery plants in North America jointly established by Korea and the U.S. have begun operations.

LG Energy Solution Ltd. has established a joint venture named Ultium Cells LLC with U.S. General Motors Co. to operate a 40-50 gigawatt-hour battery plant in Ohio and Tennessee.