[Edaily Reporter JAEMIN SONG ] Representatives from the domestic battery industry visited the National Assembly to unanimously call for the introduction of a direct tax credit refund system. They argue that, given the deterioration in profitability due to slowing demand for electric vehicles (EVs) and oversupply from China, simply raising the tax credit rate has its limitations; therefore, a direct refund system is needed so that even companies operating at a loss can receive tangible benefits.

At the “National Assembly Forum on Industrial Strategies for the Revitalization of K-Batteries,” held on the 24th at the National Assembly Members’ Office Building, industry representatives from LG Energy Solution, SAMSUNG SDI CO.,LTD., and SK Innovation attended to discuss expanding tax incentives and maintaining the domestic production base. The forum was hosted by Democratic Party lawmakers Song Jae-bong and Lee Yeon-hee and organized by the Korea Battery Industry Association.

"Even with a high tax credit rate, companies operating at a loss cannot receive benefits"

The most strongly voiced demand at the event was for a direct refund system.

Kim Nam-ho, Senior Vice President of LG Energy Solution, stated, “A high tax credit rate is meaningless,” adding, “Since we are currently operating at a loss, we are not actually receiving any benefits no matter how high the tax credit rate is.” He continued, “Since the semiconductor industry is profitable, it receives greater benefits as the tax credit rate increases, but this is not the case for the battery industry,” and requested, “Please put the domestic production promotion tax system, combined with a direct refund, to the test to see if it actually helps the industry.”

Executive Director Kim also cited the example of the Chinese battery company CATL. He emphasized, “The Chinese government has supported corporate growth through fiscal, tax, financial, infrastructure, talent, and regulatory improvements,” adding, “Practical support is needed so that companies can focus on technology development.”

Noh Myeong-ho, Group Leader at SAMSUNG SDI CO.,LTD., also designated batteries as a national strategic industry and urged the expansion of tax incentives.

Group Leader Noh argued, “The battery industry still has ample future competitiveness,” and stated, “Tax credits for research and development (R&D) and facility investments in cutting-edge strategic industries should be paid directly or made transferable to third parties.” He continued, “The U.S. is creating demand through the Inflation Reduction Act (IRA) by providing not only production tax credits but also subsidies for energy storage system (ESS) installation costs,” adding, “While we cannot follow everything they do, we need to keep pace to some extent.”

"Companies Are Also Making Self-Rescue Efforts… Now We Need Institutional Support"

Yoon Young-doo, Executive Vice President of SK Innovation, emphasized that the industry is not merely demanding government support.

“Companies are also making painstaking efforts to turn things around,” said Vice President Yoon. “We are restructuring our business by winding down our joint venture in the U.S. and shutting down our plant in China, while preparing to invest in ESS production and LFP batteries domestically.” He added, “We are currently in a period of weathering the storm,” noting, “If the government lends us just a little support, we will be able to contribute to the national economy once again.”

The industry called for not only the direct refund system but also expanded support for the entire battery supply chain.

Lee Hee-yeop, Executive Director of the Korea Battery Industry Association, said, “The battery industry is directly linked to national security,” adding, “We need to prioritize reviewing direct refunds for investment tax credits and also discuss direct refunds for tax incentives to promote domestic production as a practical supplementary measure.”

The government also appeared to share some of these views. Kang Kyu-hyung, Director of the Battery, Electrical, and Electronics Division at the Ministry of Trade, Industry and Energy, said, “First and foremost, it is important for the industry to be included in the scope of the production tax credit,” adding, “There is also a need to secure a separate budget for R&D programs dedicated to the battery industry.”

During the forum, analysts also pointed out that battery demand, which had previously been centered on electric vehicles, is expanding to include energy storage systems (ESS), AI data centers, and humanoid robots. Participants agreed that, given the battery industry’s status as a core national strategic industry, discussions on follow-up legislation—such as the direct refund system and the expansion of production tax credits—must be accelerated.