AESC delay opens door for Korean battery trio in BMW's US EV plans

Korea Herald

14 hours ago

LG, SK emerge as top contenders, with local production, tariff resilience, advanced 46-series tech
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.