Electric vehicles using the products of Korean battery makers Samsung SDI and LG Chem were left out from government subsidies in China, it was revealed Sunday, with South Korean industry watchers suspecting that the move could be part of Beijing’s retaliation against Korea’s deployment of a missile defense system.

Both battery makers are maintaining a wait-and-see stance to the measure. Samsung said it is “grasping the situation through its Chinese arm,” while LG is hoping “things work out well,” declining to make further comments.

Thursday morning, the Chinese government announced a list of 498 eco-friendly car models eligible for subsidies. But in the afternoon of the same day, it suddenly announced a new list, excluding five models using batteries from Samsung SDI and LG Chem.

The cars include Shaanxi Automobile’s electric truck, Dongfeng Motor’s electric truck, Shanghai GM’s Cadillac hybrid vehicle and SAIC Motor’s hybrid cars, which all use batteries from the Korean firms.

The measure is viewed by industry watchers as retaliation against the Terminal High Altitude Area Defense anti-missile system deployment in Korea, considering the two firm’s global competitiveness and battery production capacity in the nation.

In 2015, LG Chem built a battery plant in Nanjing, eastern China, capable of supplying batteries for 100,000 electric vehicles. In the same year, Samsung SDI also built a plant in Xian, central China, capable of providing batteries for 150,000 electric vehicles.

The revised list of 493 models include around 50 models using Chinese batteries, which have not yet been certified by the government.

“EV makers are not able to have a competitive edge without government subsidies because the cost of batteries takes up around half of total EV costs. The continued exclusion has made Samsung and LG’s plants in China not (able to) operate at (their) full capacities,” said an industry source, who declined to be named.

By Shin Ji-hye (shinjh@heraldcorp.com)