It was confirmed on the 23rd that the Ministry of Trade, Industry and Resources did not include a budget related to "production subsidies" for the battery sector in its budget request for next year. Production subsidies are fiscal support that the government pays in proportion to output to strengthen the competitiveness of a specific industry or corporations.
As a rule, the Ministry of Planning and Budget reflects in next year's budget only the programs that the lead ministry included in its budget request. As a result, some say next year's battery production subsidies have effectively fallen through.
According to ChosunBiz reporting, the Ministry of Trade and Industry (MOTI) is said not to have included a budget related to battery production subsidies in the budget request for next year that it submitted to the Ministry of Planning and Budget at the end of last month.
Battery production subsidies are a system that domestic battery corporations asked the government for. As low-priced Chinese battery makers dominate the market, Korea's three battery companies have been posting operating losses since the fourth quarter of last year. In the first quarter this year, operating losses were 349.2 billion won for SK On, 155.6 billion won for Samsung SDI, and 207.8 billion won for LG Energy Solution.
The government is currently supporting the battery sector by providing purchase subsidies to electric vehicle consumers. The Ministry of Trade and Industry (MOTI) went a step further, saying additional fiscal support was needed.
However, it is analyzed that priorities shifted to other large-scale budget programs linked to the administration's national agenda, such as the Max (M.AX·Manufacturing AI Transformation) project or the "five poles, three specials" plan (reorganizing the national territory around five mega-regions and three special self-governing provinces for support). An official at the Ministry of Trade and Industry (MOTI) said, "We will not discuss battery subsidies in this budget process."
The official explained, "Only after the Ministry of Finance releases a domestic production promotion tax plan can we discuss the need for and size of subsidies." The domestic production promotion tax system reduces corporate taxes for corporations that produce and sell strategic industry products in Korea. It is also a campaign pledge of President Lee Jae-myung. The government plans to announce specific introduction measures, including the eligible sectors and the method of tax reduction, next month.