[Edaily Reporter Park Soon-yeop] An analysis suggests that as the European Union (EU) strengthens its push to reduce reliance on China in the electric vehicle and battery supply chains, the likelihood of Korean rechargeable battery manufacturers benefiting in the medium to long term is increasing. Given that European automakers currently rely heavily on Chinese battery suppliers, it is projected that the three major Korean battery companies—LG Energy Solution, Samsung SDI, and SK On—could benefit as the EU restructures its procurement to include non-Chinese suppliers.
Lee Hyun-wook, an analyst at IBK Investment & Securities, stated in a report on the 5th, “Korean rechargeable batteries can fill the void left by Chinese batteries,” adding, “The restructuring of Europe’s supply chains to reduce dependence on China is likely to accelerate starting in 2027.”

The report highlighted the Industrial Accelerator Act (IAA), proposed by the European Commission last March. The IAA is a legislative initiative designed to create demand for European low-carbon products through public procurement and government support, and to expand the domestic production base for strategic industries. For the automotive industry, requirements include the final assembly of electric vehicles within the EU, a minimum of 70% of vehicle components (excluding batteries) sourced from the EU, and the use of EU-sourced key components in drive batteries.
The initial requirements for vehicle batteries stipulate that at least three specific key components, including EU-made battery cells, must be used. Key components include battery packs, modules, cells, cathode active materials, anode active materials, electrolytes, separators, current collectors, battery management systems (BMS), and thermal management systems (BTMS). Three years after the law takes effect, the requirements will be further strengthened, requiring the inclusion of at least five specific key components of EU origin, among which battery cells, cathode active materials, and BMS must be of EU origin.
However, the actual production location is expected to be the key factor in determining origin, rather than the company’s nationality. Even a Chinese company like CATL is likely to be recognized as EU-origin if it actually manufactures battery cells at a factory in Hungary or Germany. Conversely, if cells produced in China are imported into Europe and simply assembled into modules or packs, the cells themselves will not be considered EU-origin.
The researcher explained, “In the long term, cell factories within Europe alone will not be sufficient,” adding, “Further localization of the supply chain for materials and components, including cathode materials and BMS, is necessary.”
The problem is that the proportion of Chinese-sourced batteries among major European automakers is already high. According to IBK Investment & Securities, as of April this year, the proportion of Chinese-sourced batteries among major European automakers stood at 65.2% for the Volkswagen Group, 76.3% for the BMW Group, and 88.0% for the Stellantis Group. It was also found that for the Mercedes-Benz Group, the combined share of Chinese companies such as CATL, Farasis, and CALB exceeds 70%.
Assuming that the share of Chinese batteries is unlikely to exceed 30%, these automakers must reallocate a significant volume of orders to non-Chinese suppliers. Calculations show that Volkswagen must shift approximately 35 percentage points, BMW approximately 46 percentage points, Stellantis approximately 58 percentage points, and Mercedes-Benz more than 40 percentage points of their supply volume to non-Chinese suppliers. This implies that major European OEMs, where the share of Chinese battery procurement exceeds 30%, must reallocate an average of 44.8 percentage points of their volume to non-Chinese battery suppliers.
In this process, the strategic value of domestic battery manufacturers is expected to rise. Since European automakers are already utilizing Korean battery manufacturers as key suppliers, it is more realistic to expand orders from existing suppliers rather than certifying new ones.
By company, #LG Energy Solution is expected to benefit the most. LG Energy Solution has a track record of supplying batteries to numerous European automakers, including Volkswagen, Stellantis, and Renault-Nissan. #Samsung SDI stands to benefit directly if BMW moves to diversify its supply chain, as it is BMW’s primary non-Chinese supplier. SK On is expected to secure additional orders as Chinese suppliers’ market share shrinks, given its significant market share with Mercedes-Benz and Ford.
Local production capacity in Europe is also cited as a strength for Korean companies. According to the report, the current operational and ramp-up production capacity of the three major Korean battery manufacturers in Europe stands at approximately 173 gigawatt-hours (GWh). The current operational and ramp-up production capacity of Chinese battery manufacturers is estimated at approximately 42 GWh. However, if potential production capacity currently under construction or already confirmed is included, the production capacity of Chinese companies in Europe could increase to about 235–237 GWh, suggesting that competition will continue in the medium to long term.
LG Energy Solution operates an 86 GWh production facility in Wrocław, Poland. SK On has secured 47.3 GWh of production capacity through its plants in Komárom and Iváncsa, Hungary. Samsung SDI is estimated to have approximately 40 GWh of production capacity at its plant in Göd, Hungary.
However, analysts suggest that the benefits are unlikely to materialize in the short term. This is because battery certification and development cycles vary by vehicle model and are lengthy, and automakers find it difficult to switch their existing supply chains quickly. Another variable is that Chinese battery manufacturers can also meet IAA requirements by expanding local production in Europe.
The analyst stated, “The benefits for domestic battery companies are more likely to materialize through securing orders for new vehicle models and subsequent platforms in the medium to long term, rather than through short-term supplier replacements.” He added, “Once European automakers begin diversifying their suppliers in earnest, the strategic value of Korean battery companies—which have secured both production bases in Europe and a track record of supplying customers—will come to the fore.”