John H. Kwon
The manufacture and assembly of Lithium-ion (LFP) and Manganese Nickel Cobalt (MNC) cells have been severely disrupted by the passage of the Inflations Reduction Act of 2022 by the United States Congress. Under the Act, electric vehicle (EV) tax credit is no longer available for batteries sold in the United States unless the battery is assembled in the U.S. Furthermore, in order to qualify for tax credits, rare elements such as Lithium, Nickle, Cobalt, and Manganese must now be extracted or processed in the U.S., or a country with a free trade agreement with the U.S. Since the United States is still a significant market for EVs, some battery manufacturers have had to change their global strategies and invest in the construction of battery plants in the United States. Whilst the extraction of rare metals will continue in countries where these resources are abundant, the processing of those metals will increasingly be done in countries with free trade agreements with the United States. This is resulting in the re-organization of existing supply chains around the world. Similar disruption to existing supply chains will further be exacerbated with the imminent passage of the European Union Critical Raw Minerals Act of 2023.
We are experiencing rapid changes in technology coupled with a greater risk of investment in such technologies. The LFP and MCN batteries of today may be in the future taken over by more cost-effective technologies such as Sodium batteries. There can be new technologies such as, amongst others, Hydrogen-based fuel cells or solidstate batteries, which can further disrupt the market in the future. However, these better technologies may still fail if they are too costly for the EV consumer. The cost of the EVs will be key, and the notion of a car itself may change with the advent of replacement EV battery technology. The technology is already here, but how it is adapted by consumers and how it will be standardized by OEMs and governments has become a significant issue. There is a greater challenge for legal professionals to understand the trends affecting the EV industry and to be at the forefront of implementing global strategies, which may need to be short-term, to accommodate the evolving EV industry. As the changes are giving rise to new business opportunities, such as in the case of recycling, flexibility and business acumen are qualities that are increasingly needed for legal professionals to advise in this environment.
“The LFP and MCN Batteries of today may be in The Future Taken Over By More Cost-Effective Technologies such as Sodium Batteries.”
As the industry is rapidly changing with technology and regulations, it has become imperative to ensure legal compliance amidst the changes. On the technology front, intellectual property registration, licensing, and enforcement have become paramount to supporting go-tomarket strategies for battery products. On the regulation front, keeping abreast of changing global regulations and coming up with structures to ensure compliance has become important. However, legal compliance with regulations alone has not necessarily been the solution, as the interpretation of regulations is increasingly affected by geopolitical issues. Awareness of this risk is thus becoming imperative when designing compliance strategies. The changing industry and disruption of the supply chains during the last year have resulted in the creation of many new opportunities with joint venture partners. Internal control and empowering business ethics have become key in managing the relationship with these parties.
I started my legal career at the Magic Circle firm, working on cross-border M&As and Corporate Finance. I then moved to become the APAC General Counsel for a Fortune 50 MNC, which gave me the opportunity to pursue an MBA. Upon completion, I was given a P&L role managing various businesses for the company - the areas where I have worked have been in manufacturing, sales, supply chain, and construction. Thereafter, I worked on roles where investment and strategy were important deliverables. I think these experiences have prepared me well to become a legal professional with a good understanding of the commercial context in which we operate to deliver strategic results while ensuring the highest standard of business ethics and compliance.
It’s been a busy year, and the world has truly opened up after the COVID restrictions were lifted. The disruption of the supply chain and changes in technologies are resulting in many opportunities, and I urge senior leaders to actively connect to new stakeholders spearheading the EV revolution. There are numerous speaking opportunities at conferences where knowledge of the trends can be shared, and it will be through the exchanging of ideas that new business opportunities will be created. There are so many new players entering the battery space, which is creating new industries, such as the use of ion batteries in storage systems, ships, and even aircraft. We are at the forefront of something new, which is quite exciting, and it is never too late to become an integral part of the future we are creating now through the pursuit of greener technologies.
