‘Korean version of IRA’ for battery makers gets a jolt from Lee Jae-myung’s win
Lee Jae-myung’s victory will likely bring Korea closer to revising tax laws favorable to battery companies, dubbed the Korean version of the Inflation Reduction Act (IRA), ending months of uncertainties for domestic battery manufacturers.
The pledge aims to attract production facilities from the country’s major battery makers — LG Energy Solution, Samsung SDI, SK On — with tax reductions on domestic investments. Many new facilities have been built in the United States due to various subsidy programs like the Advanced Manufacturing Production Credit (AMPC) under the IRA.
By calling batteries the key to “recharge Korea’s economy,” Lee also vowed to strengthen the budget for solid-state batteries, which are touted as solid-state batteries for their safety, and support for energy storage systems and the used batteries industry.
Korean battery manufacturers are strongly calling for revisions to the Act on Restriction of Special Cases Concerning Taxation, in a way that converts a 15 percent tax credit on their capital expenditures into direct cash reimbursement for battery firms.
The current system applies in the form of a reduction in their corporate taxes, which makes loss-making companies ineligible for any benefits. Korea’s three largest battery makers have all been recording operating losses for two consecutive months, excluding subsidies from the U.S. government.
DP lawmaker Shin Young-dae told the Korea JoongAng Daily, who serves as the head of the National Assembly’s battery forum, said:
With Lee’s administration set to take shape, a suite of policy initiatives is expected to follow, likely through forming entities such as a National Policy Advisory Council, designed to catalyze investment and expand infrastructure,
Shin in April proposed a bill to amend the tax law and set up a Korean version of the IRA by helping them with a cash form of tax credits. As a key liaison between the battery industry and the National Assembly, the Shin-led forum plays a pivotal role in conveying the sector’s challenges and priorities to the government, helping to facilitate relevant legislation.
In fact, the U.S. IRA, enacted in 2022, has been actively supporting its battery industries through AMPC, which offers companies manufacturing batteries and related components in the U.S. are eligible for a direct reimbursement of 30 percent of their investment costs, along with a subsidy of $45 per kilowatt-hour produced.
While AMPC has so far served as a financial buffer for Korean battery manufacturers, declining production volumes are beginning to erode its impact making further losses increasingly unavoidable.
LG Energy Solution, the country’s largest battery maker, posted a 374.7 billion won ($272 million) in operating profit in the first quarter, but excluding AMPC benefits, the company would have recorded an operating loss of 83 billion won.
Samsung SDI reported an operating loss of 434.1 billion won during the same period while SK On logged 299.3 billion won of losses.
A source from a major battery company, said:
Given the current downturn in the battery industry, the option to receive tax benefits in the form of cash refunds would be a substantial source of relief, as it can still be reflected directly in earnings,
“A swift and decisive leadership is urgently needed to respond to the escalating trade tensions driven by U.S. tariffs.”
The president-elect also promised to establish a “Battery Triangle Belt” connecting the Chungcheong, Yeongnam, and Honam regions for improved infrastructure tailored to each specialized cluster. The Chungcheong region will focus on battery manufacturing while Yeongnam will specialize in core materials and emerging demand, and Honam will serve as a hub for critical minerals and cathode materials, according to Lee’s post on Facebook.
Analyst Anna Lee from Yuanta Securities, said:
Lee intends to create a ministry dedicated to handling climate and energy issues to build a renewable energy–centered system which could turn short-term market sentiment positive,
“But it remains unlikely that domestic battery companies will receive benefits on a scale comparable to U.S. IRA subsidies, given the limited policy scope and budget constraints in Korea.”
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‘Korean version of IRA’ for battery makers gets a jolt from Lee Jae-myung’s win, source
