Core Viewpoint - The article discusses the recent changes in the IRA (Inflation Reduction Act) proposals, focusing on the implications for electric vehicle subsidies and clean energy support, particularly affecting the battery industries in China and South Korea [3][4][6]. Policy Changes - The original IRA included a $7,500 tax credit for consumers purchasing eligible electric vehicles, contingent on the production of battery components and critical minerals in North America or free trade agreement countries, with restrictions on materials linked to Chinese supply chains [2]. - The new proposal aims to gradually eliminate electric vehicle subsidies by the end of 2025 or 2026, and to terminate hydrogen subsidies and clean energy tax credits by 2029 [3]. Impact on Chinese Battery Industry - Short-term impacts are limited, but long-term adjustments in the supply chain are anticipated, with significant export restrictions on key battery materials from China to the U.S. [8]. - China currently supplies 68% of natural graphite and 59% of synthetic graphite imported by the U.S., and strict enforcement of "decoupling" policies could significantly increase export costs for Chinese battery companies [8]. - Chinese battery manufacturers hold over 60% of the global market share and dominate processing of key resources like lithium and cobalt, facing challenges if the U.S. enforces a decoupling strategy [9]. - Chinese companies are accelerating overseas investments to mitigate trade barriers, with firms like CATL and Guoxuan High-Tech expanding their manufacturing presence in Europe [8]. Impact on South Korean Battery Industry - South Korean battery manufacturers, such as LG Energy Solution and SK On, are at risk of losing subsidy eligibility due to their reliance on Chinese supply chains, which could lead to significant profit reductions [11]. - For instance, LG Energy Solution could see a 30% decrease in profits if subsidies are removed, while SK On may shift from profit to loss [11]. - Investment plans in North America are being delayed, with companies considering lower-cost regions like Mexico or Europe for new facilities [13]. Industry and Policy Controversies - There is opposition from the U.S. clean energy sector, with companies like Siemens and Hyundai warning that subsidy cuts could lead to investment losses and job reductions [16]. - Environmental organizations criticize the subsidy reductions, predicting an increase in greenhouse gas emissions and higher household energy costs [16]. - The competitive landscape may shift, with Tesla potentially gaining an advantage due to its cost control and local supply chain strategies, while emerging brands like Rivian and Lucid could be marginalized [17]. - Despite policy barriers, there remain opportunities for collaboration between Chinese and South Korean companies in battery technology and resource procurement [17].