By The U.S. has recently imposed stricter regulations targeting Chinese battery-material rivals, which has resulted in a surge for Posco Future M and other South Korean battery-material stocks. Posco Future M, a supplier of cathode and other essential battery materials, saw its shares rise by 11% to close at 348,000 won ($268.76). This significant gain outperformed the 0.4% increase in the benchmark Kospi index for the day.
The Biden administration’s new guidance, issued on Friday, imposes restrictions on Chinese materials used in electric-vehicle (EV) batteries that are eligible for U.S. tax credits. According to Daishin Securities analyst Jeon Chang-hyun, this guidance disqualifies companies owned or controlled by a “foreign entity of concern” (FEOC), such as China, from receiving tax credits. This development is expected to further enhance the dominance of South Korean competitors in the U.S. EV battery supply chain.
Jeon Chang-hyun predicts that Posco Future M and other South Korean battery-material suppliers will increase their stakes in existing joint ventures with Chinese partners. This strategic move is in response to the new rule that deems any company with an FEOC stake of 25% or more as ineligible for EV tax credits.
The implementation of these new FEOC rules is slated for 2024 for finished battery products and 2025 for battery minerals.
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