China’s dominance over EV supply chains risks making U.S. subsidies for the industry unusable, South Korea has said.Subsidies for EV manufacturing, including components, under the Inflation Reduction Act seek to reduce sourcing from China. Yet China controls almost the entire EV supply chain. This means few if any companies involved in EV manufacturing in the U.S. would be able to benefit from the incentives, South Korea’s trade ministertoldthe Financial Times.According to data from Benchmark Minerals Intelligence, Chinese companies control as much as 99% of the global market for EV battery-grade graphite and 69% of battery anode graphite, the FT reported.“Unless they make some kind of exemption or transition period, the whole [EV subsidy] regime will collapse,” Ahn Duk-geun, South Korea’s minister of trade and energy, told the publication. “I believe they will try to find a way to somehow take this market reality into consideration,” he added.Thelegislationin question targets so-called foreign entities of concern, meaning companies with ties to China. Sourcing materials or components from such companies would disqualify U.S. EV players from getting the tax credit, which comes in at some $7,500 per vehicle.The rule first enters into effect for battery components this year, to extend to battery raw materials from 2025.China has alreadyrespondedto the rule by filing a complaint with the World Trade Organisation, saying the legislation is discriminatory since it would essentially ban direct imports of Chinese EVs into the United States."Under the disguise of responding to climate change, reducing carbon emission and protecting environment, (these subsidies) are in fact contingent upon the purchase and use of goods from the United States, or imported from certain particular regions," China’s mission to the WTO said in March.ADVERTISEMENTSouth Korea, for its part, is already a major player on the EV battery market in the United States, with billions in new capacity investments as companies seek to get a piece of the IRA subsidy pie.By Irina Slav for Oilprice.comMore Top Reads From Oilprice.com:Join the discussion Back to homepage