"K-Battery Technology and Talent at Risk of Outflow... Now Is the Golden Time for Policy Support"

Industrial Strategy Forum for K-Battery Rebound

"Need to Introduce Direct Refund-Type Production Tax Credits"

Participants are taking a commemorative photo at the "National Assembly Forum on Industrial Strategy for the Relaunch of K-Battery" held at the National Assembly on the 24th. Photo by Heejong Kang

Concerns have been raised that if domestic battery companies continue to lose market share, there could be an outflow of technology and talent. Experts emphasized that this is a golden time for K-battery companies to restore their competitiveness. Specifically, they pointed out the need to introduce a direct refund-type tax credit system, which is currently being adopted in countries such as the United States and Canada.

At the 'National Assembly Debate on Industrial Strategy for the Rebound of K-Battery' held at the National Assembly on the 24th, Kim Cheoljung, Head of the Strategic Industry Team at Mirae Asset Securities, evaluated the Korean battery industry as "one of the few globally competitive value chains in the world, excluding China." He stressed, "A further decline in market share could lead to the outflow of technology, talent, and assets, so now is a golden time for policy support to restore competitiveness."

Kim further added, "The battery industry is expected to see expanding demand through energy storage systems (ESS) and AI data centers, and to achieve long-term growth," emphasizing the need for realistic, targeted support centered on competitive companies as well as sustainable policy support.

Kim forecast that with the resumption of electric vehicle subsidies in Europe and the continued global high oil prices, demand for electric vehicles will maintain its growth trajectory over the medium to long term. He said, "The ESS market is expected to see explosive growth, driven by the expansion of renewable energy and increased investment in AI data centers," predicting that it will become a core growth engine for the entire battery market.

Kim noted, "With the promotion of the United States' One Big Beautiful Bill Act (OBBBA) and the EU's Industrial Acceleration Act (IAA), the economic policies of major countries toward China are expanding from finished electric vehicles to the entire battery supply chain." He analyzed, "As North America begins to substantially reduce its reliance on Chinese batteries in the ESS market, opportunities for domestic battery companies to secure new orders are growing."

An Jeonghye, attorney at Yulchon LLC, stressed that "direct refund-type tax credits are a matter of timing, not choice," highlighting the need to enhance the effectiveness of the tax support system.

According to Attorney An, key competing countries such as the United States, with its Advanced Manufacturing Production Credit (AMPC) under the Inflation Reduction Act (IRA), and Canada, with its Clean Technology Investment Tax Credit (CT ITC), are providing tangible cash support to companies through direct refund-type tax credits.

In contrast, the domestic tax credit system applies credits within the amount of corporate tax payable and allows unused credits to be carried forward, which limits the system's usefulness for loss-making companies. In particular, as battery companies' profitability has recently deteriorated due to sluggish demand and China's low-price offensive, the effectiveness of tax credits is also declining.

Attorney An analyzed, "For companies in the early stage of large-scale investment, tax credits tend to accumulate instead of resulting in actual benefits, which is why the need to introduce direct refund-type tax credits is growing."

During the panel discussion, Namho Kim, Executive Director at LG Energy Solution, raised the need to introduce direct refund-type tax credits, while Myungho Noh, Group Leader at Samsung SDI, proposed improvements to tax credits for research and development (R&D) costs and facility investment.

Yeongdu Yoon, Executive Vice President at SK Innovation, discussed measures to vitalize the domestic ESS industry and effective tax support, while Wooyoung Choi, Executive Director at Ecopro, stressed the need to expand tax support for overseas refining and processing projects and to establish a comprehensive government battery policy.

An Wanki, Distinguished Professor at Korea Polytechnic University and chair of the discussion, stated, "The battery industry is a strategic sector that determines national industrial competitiveness and energy security, so a long-term industrial policy is needed beyond short-term market responses." He added, "In addition to tax support, it is necessary to organically link policy finance, investment funds, supply chain stabilization, and next-generation technology development support, and to establish a sustainable support system through cooperation between the government, National Assembly, and industry."

Hee-Yeob Lee, Executive Director at the Korea Battery Industry Association, said, "Along with enhancing the effectiveness of the tax credit system, support is needed in various fields such as R&D and ESS." He added, "To enhance the effectiveness of tax support, we should first consider direct refunding of investment tax credits, and also review direct refunds for domestic production promotion taxes as a realistic complementary measure."

At the discussion, Kyu-Hyung Kang, Director of the Battery Electronics and Electrical Division at the Ministry of Trade, Industry and Energy, said, "This year, our goal is to include batteries as a target for production tax credits," and added, "We are also pursuing a 300 billion won R&D program budget."

The debate was hosted by Democratic Party lawmakers Eonju Lee, Hankyu Kim, Giwang Bok, Cheolmin Jang, Hyangyeop Kwon, Jaebong Song, Sehee Oh, Yeonhee Lee, Jinuk Jeong, and Sungmu Heo, and organized by the Korea Battery Industry Association.

Assemblyman Jaebong Song stated, "The battery industry requires large-scale preemptive investment, so we must create an environment where companies can boldly invest with an eye toward the future." He added, "We will strengthen policy support at the National Assembly level to enhance the effectiveness of tax incentives, including direct refunds of investment tax credits, so that domestic production and investment can be sustained."

This content was produced with the assistance of AI translation services.