The Trump administration’s latest moves to ease vehicle emissions is expected to deal a blow to local companies involved in electric vehicles such as LG Chem, South Korea‘s leading electric vehicle battery maker, an industry expert said Wednesday.

“It is likely that global automakers’ momentum to develop electric vehicles will weaken due to the US government’s decision (to ease regulations),” said Lee Choong-jae, an analyst from KTB Investment and Securities.

Lee added that LG Chem, for one, will experience negative impacts as it has close ties to GM, which could also adjust the speed of its electric vehicle development. 

The local firm supplies batteries for the Bolt EVs made by GM’s affiliate brand Chevrolet.

EV batteries account for some 30 percent of LG Chem’s total sales, among which some 20 percent is generated from batteries supplied to the Bolt EV model.

LG Chem posted 20.6 trillion won ($18 billion) in sales last year, up 2.2 percent on-year, according to the firm.

The US government’s move comes as major automakers -- GM, Ford, Toyota, Hyundai Motor and Kia Motors -- have consistently urged the Trump administration to ease regulations on vehicle emissions and corporate average fuel economy standards.

The US Environmental Protection Agency and the US Department of Transportation will most likely stand on the side of global auto firms, according to the New York Times and Reuters.

US electric car giant Tesla and China-based EV companies will rise as EV market leaders due to the latest decision, Lee said.

Global investment bank Goldman Sachs Group also projected that China will lead the EV market that will grow into a $40 billion industry by 2025.

Meanwhile, keen on expanding its market power, the Chinese government ordered its battery makers to boost their production capacity twofold by 2020, and vowed active support to achieve technical developments over the weekend, the state-run China Daily newspaper cited.

LG Chem is ramping up production in China with an aim to gain a foothold in the EV market there.

LG Chem said it will invest over 700 billion won this year to expand production lines at its factory in Nanjing, a city in the eastern part of China‘s Jiangsu province.

The factory sits on land that is three times the size of a soccer field. It also has the capacity to make batteries for over 50,000 electric cars and 180,000 plug-in hybrid cars yearly.

By Kim Bo-gyung (lisakim425@heralcorp.com)