"Creating an Unfair Environment with Subsidies"
Core Battery Material Graphite, 92% Market Share Held by China
Tesla Impacted... LG Energy Solution and SK Battery Also Affected
The U.S. graphite industry has requested the Department of Commerce to impose tariffs of up to 920% on Chinese graphite. They claim that Chinese companies, backed by massive subsidies, are artificially lowering graphite prices, creating an unfair competitive environment. If such high tariffs are implemented, it is expected to impact not only electric vehicle companies like Tesla but also Korean firms such as LG Energy Solution and SK Battery America.
According to Bloomberg on the 18th (local time), the American Association of Active Anode Material Producers (AAAMP), a U.S. graphite production industry group, submitted a petition the day before to the Department of Commerce and the International Trade Commission (ITC) requesting an anti-dumping investigation against Chinese graphite.
The U.S. government has been pushing to increase investment in mining and synthetic graphite production to reduce dependence on China. However, the industry argues that without additional measures on Chinese graphite imports, these efforts will fail. They also pointed out that the existing 25% tariff is insufficient to alleviate pressure from Chinese companies that, backed by subsidies, are overproducing. According to a study conducted by Oxford Economics, as of 2023, China controls 92% of the premium graphite market used in battery production. Eric Olson, spokesperson for AAAMP, said, "This industry is on the verge of suffocation due to China's malicious trade practices," adding, "If we want this industry to grow in North America, it must be protected."
The decision to impose tariffs on Chinese graphite is expected to be made after January 20, 2025, when President-elect Donald Trump takes office. Bloomberg assessed that the situation will become a showdown between Australian company Novonix, which has a graphite production plant in Tennessee, U.S., and American graphite companies versus Tesla.
If tariffs on Chinese graphite increase, battery prices will rise, and the price of American-made electric vehicles will also increase. According to Sam Abuelsamid, an analyst at Guidehouse Insights, graphite accounts for about 10% of the manufacturing cost of electric vehicle battery cells. If graphite-related costs rise by 900%, the total cost will double until alternative suppliers increase production. This poses a significant burden on Elon Musk, Tesla's CEO and a close associate of President-elect Trump.
Korean companies are also expected to be affected. LG Energy Solution and SK Battery America, which operate factories in Michigan and Georgia respectively, stated in separate submissions that they are facing difficulties finding stable graphite supply sources outside of China.
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