The importation of low cost Chinese-made Lithium Iron Phosphate (LFP) batteries is surging in South Korea and argue Tesla is the reason why. Tesla, currently the world’s leading electric car manufacturer uses LFPs. As a result, South Korea manufactured budget friendly electric vehicles are increasingly being fitted with affordable LFP batteries to compete on price.
The import value of Chinese-made batteries for electric cars has seen a significant growth of 114.6% from January to August this year compared to the same period last year. The import value has already exceeded the total value of the previous year by August. This has resulted in a trade deficit of close to 6 trillion won in the electric car battery segment alone.
In South Korea, Hyundai’s sport utility vehicle Kona Electric is sold containing Chinese LFP batteries. Similarly, Kia uses LFP batteries in its Niro and Ray EV models. KG Mobility’s new electric car, the Torres EVX, incorporates LFP batteries from BYD, a Chinese battery firm.
Sales of electric vehicles with LFP batteries are increasing. In South Korea, Tesla’s Model Y sold 4,206 units in September, which was ten times more than the previous month. This surge in sales was due to the switch from LG Energy Solution batteries to LFP batteries made in Tesla’s Shanghai factory. The price reduction of around 20 million won played a significant role in this increase.
LFP batteries fall short compared to South Korean nickel, cobalt, and manganese (NCM) batteries “energy density,” which means LFPs typically have reduced range compared to NCM. LFP batteries however have an advantage when it comes to safety as they are less likely to cause vehicle fires. South Korean battery companies are now developing their own LFP batteries with projected availability of 2026.