AESC delay opens door for Korean battery trio in BMW's US EV plans
Faced with shifting US policy and trade risks, AESC — a Japan-based battery maker majority-owned by China's Envision Group — has paused its $1.6 billion battery cell factory project in South Carolina, originally intended to supply BMW electric vehicles.
The move underscores Korean battery firms as potential alternatives for the German automaker, given their accelerated push to expand US-based production.
'Due to policy and market uncertainty, we are pausing construction at our South Carolina facility at this time,' AESC said in a recent statement. While no timeline was given, the company said it would 'resume construction once circumstances stabilize' and reiterated its pledge to invest $1.6 billion and create 1,600 jobs.
South Carolina Gov. Henry McMaster noted that AESC is navigating potential fallout from the loss of federal EV subsidies and tax incentives, as well as tariff risks linked to US President Donald Trump's return to power.
AESC said it has already invested $1 billion in the Florence facility — its second US production site after an ongoing project in Kentucky. The company had earlier scaled back plans to build two plants in South Carolina, saying one would suffice to meet BMW's projected demand.
Despite AESC's construction pause, BMW confirmed it will proceed with the opening of its $700 million battery assembly plant in Woodruff, South Carolina, by 2026. The automaker had originally planned to use AESC's 46-series cylindrical cells — 46 millimeters in diameter — in its next-generation EV lineup, including the 'BMW Vision Neue Klasse.' By 2030, BMW aims to produce at least six all-electric models in the US.
Industry insiders say the disruption in AESC's US supply could open doors for Korean battery makers. Among them, Samsung SDI began supplying the larger cylindrical batteries to a US carmaker for the first time in March. LG Energy Solution is set to begin mass production in the latter half of this year, while SK On has completed its development process.
'AESC, acquired by Hong Kong's Envision Group in 2018, managed to bypass US trade barriers targeting the Chinese EV supply chain due to its Japanese origins,' said Park Cheol-wan, an automotive engineering professor at Seojeong University. 'Its pause could signal a cautious approach amid trade tensions — or a strategic pullback by BMW in its US EV plans.'
Yang Min-ho, an energy engineering professor at Dankook University, noted, 'Given BMW's commitment to the US market and the likelihood that it will need to expand local production under Trump's protectionist trade stance, the automaker will likely seek to fill the gap in its battery supply chain.'
He added that BMW could turn to LG Energy Solution or SK On, both of which have US production sites and carry less tariff risk. As of June, LG Energy Solution and SK On are operating or building seven and four facilities, respectively, in North America, including joint ventures with major automakers.
BMW's tariff woes
Before the Trump administration's shifting tariff policies targeting both allies and adversaries, BMW's US EV strategy relied on importing vehicles assembled in Europe — primarily Germany — while ramping up its production capacity in North America.
BMW's key battery suppliers in Europe, Samsung SDI and China's CATL, signed long-term contracts in 2019 extending through 2031. These deals played a crucial role in BMW's European EV push and allowed the automaker to allocate part of its European output to the US.
Meanwhile, BMW had also looked to cost-competitive battery producers like AESC for US supply. But after facing a 27.5 percent tariff on passenger cars imported from EU countries, the company has been under growing pressure to increase domestic production.
German Chancellor Friedrich Merz recently announced plans to offset US tariffs by equalizing the value of automobile trade. The proposal would allow duty-free imports of US-made cars into Germany in exchange for equivalent tariff waivers on German cars shipped to the US.
However, based on the recent US–UK tariff arrangement — which limits 10 percent tariffs to just 100,000 vehicles from the UK — Germany's roughly 400,000 annual car exports to the US may only benefit from partial tariff relief.
'Even though Germany has more at stake than the UK, Trump is unlikely to offer full waivers on German cars,' said Yang.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
6 hours ago
- Korea Herald
Lee calls for swift execution of T31.8W extra budget to boost economy
President Lee Jae Myung urged the government Saturday to swiftly execute the 31.8 trillion-won (US$23.3 billion) extra budget to help stimulate the sluggish economy amid economic challenges. His remarks came during a Cabinet meeting he presided over to approve the budget, which exceeds the government's initial proposal of 30.5 trillion won. The approval followed the budget's passage by the National Assembly the previous day. "The new government's first supplementary budget was urgently prepared in consideration of the very difficult national economic situation," Lee said during the meeting. "All relevant ministries must do their best to ensure it is executed as quickly as possible so that it can serve as a catalyst to improve people's livelihoods," he added. Of the total, 12.1 trillion won has been allocated for consumption coupons to boost weak domestic demand. Depending on income levels, residents in the Seoul metropolitan area will receive coupons ranging from 150,000 to 500,000 won, those in non-metropolitan areas will receive between 180,000 and 530,000 won, and residents in rural and fishing villages will receive between 200,000 and 550,000 won. The government plans to complete the first round of distribution to all citizens by the end of this month, with an additional 100,000 won to be provided to the bottom 90 percent of income earners within two months.
Korea Herald
7 hours ago
- Korea Herald
Cabinet approves T31.8W extra budget to boost economy
The Cabinet on Saturday approved an extra budget bill of 31.8 trillion won (US$23.3 billion), marking the first supplementary budget under the Lee Jae Myung government. The budget, which exceeds the government's initial proposal of 30.5 trillion won, was passed by the National Assembly on Friday. During the Cabinet meeting, Lee said the supplementary budget was urgently prepared amid challenging economic conditions and urged relevant ministries to swiftly execute it to improve people's livelihoods, presidential spokesperson Kang Yu-jung told reporters. (Yonhap)
Korea Herald
a day ago
- Korea Herald
Seoul's top trade envoy set to visit US for 'mutually beneficial' trade talks
South Korea will work to establish a new "mutually beneficial" strategic partnership with the United States through bilateral trade negotiations, Seoul's chief trade negotiator said Friday, as he departed for Washington for tariff talks ahead of the expiration of a 90-day pause on US reciprocal tariffs. "Based on the progress made in the consultations so far, we will do our utmost to ensure that Korean companies are not placed at a disadvantage compared to other countries with the imposition of reciprocal tariffs," Trade Minister Yeo Han-koo said at Incheon International Airport, just west of Seoul. "We will use this tariff negotiation as an opportunity to establish a new framework for a mutually beneficial strategic partnership between South Korea and the US," he added. During his trip to Washington this weekend, Yeo is scheduled to hold talks with US Trade Representative Jamieson Greer and other senior US trade officials to speed up negotiations as the deadline for the resumption of the Donald Trump administration's reciprocal tariffs approaches. The trip comes just a week after Yeo met with his US counterpart in Washington, where he highlighted Seoul's commitment to "good-faith" trade talks with the Trump administration. During this week's visit, the Korean trade chief plans to discuss potential partnership to support a "manufacturing renaissance" in the US and exchange opinions on key trade issues raised by the US, according to the Ministry of Trade, Industry and Energy. During a parliamentary session earlier in the day, Yeo said the US has asked for greater access to South Korea's agriculture, automotive, digital and service markets in recent bilateral trade consultations. The trade minister did not provide further details on Washington's requests, which appeared to reflect issues raised in the USTR's recent report on foreign trade barriers. The USTR report had pointed to a number of non-tariff trade measures by Seoul, including an import ban on American beef from cattle aged 30 months or older, emission-related regulations on imported cars, proposed online platform regulations and restrictions on the export of location-based data. "The government will respond flexibly, taking into consideration the level of demands from the US side, as well as political and security sensitivities in Korea," Yeo said. "Depending on the progress of the negotiations, we will also actively push for extending the suspension of US reciprocal tariffs, if needed," he added, vowing to accelerate trade talks and reach an agreement with the US "at the earliest possible date." The trade consultations between Seoul and Washington have been centered around six areas -- balanced trade, non-tariff measures, economic security, digital trade, the country of origin issue and commercial considerations. South Korea has been seeking to gain a full exemption or reduction from the Trump administration's 25 percent country-specific reciprocal tariffs, as well as sectoral tariffs on steel, automobiles and other imports, by crafting a package deal on tariff and economic cooperation issues by next Tuesday -- when the 90-day pause on the US reciprocal tariffs is set to expire. (Yonhap)
