Mathias Vaitl, president and CEO of Mercedes-Benz Korea, attends a meeting with residents of an apartment complex in Incheon on Wednesday. Earlier this month, the automaker’s EQE electric vehicle, parked in an underground parking lot there, caught fire and caused damage to other vehicles. Yonhap

Secondary battery stocks face growing uncertainty

By Lee Min-hyung

Customer concerns about electric vehicles have increased following a recent report of a fire involving an all-electric Model X luxury SUV made by Tesla, Korea’s most popular electric car maker.

The incident further fuelled widespread fear of electric cars here after Mercedes-Benz’ EQE EV burst into flames earlier this month. Drivers have since quickly lost faith in the once-reliable German automaker after it was revealed the vehicle was fitted with a less reliable Chinese battery.

In the recent Model X fire, the vehicle was completely destroyed after about four hours of firefighting efforts. The vehicle was parked on a street in Yongin, Gyeonggi Province, on Friday afternoon.

Tesla used a battery from the Japanese company Panasonic for its electric car. This raised fears that batteries from well-known non-Chinese companies were also unsafe.

Tesla’s involvement in a similar incident raises further concerns about electric cars here, especially as the U.S. automaker is making rapid inroads into the Korean market. Tesla topped the list of electric car sales in the first seven months of this year, according to data from the Korea Automobile Importers & Distributors Association. The company sold a total of 20,060 electric cars between January and July, the most among electric car makers here, surpassing sales figures from strong domestic rivals such as Hyundai Motor and Kia.

Neither automaker has announced any concrete countermeasures to ease consumers’ ongoing fears. Mercedes-Benz Korea left open the possibility of offering compensation to those who suffered financial losses as a result of the recent EQE fiasco, but did not share any further action plans, such as a recall of the model.

A joint investigation by the police, fire department and Mercedes-Benz Korea is underway to determine the cause of the fire that destroyed an EQE electric sedan in Incheon on August 8. Yonhap

The government is asking automakers to conduct special inspections of their electric cars to allay growing customer concerns about electric vehicles. Minister Park Sang-woo said on Friday the government will announce comprehensive measures to improve the safety of electric cars early next month.

Experts attribute the ongoing fires in electric vehicles to internal defects in the battery cells.

“Possible defects inside a battery cell are probably the most likely cause (of the recent EQE fire),” Yoon Won-sub, professor of energy science at Sungkyunkwan University, told reporters in a recent media interview.

The professor also expressed his greater confidence in Korean battery manufacturers such as LG Energy Solution, Samsung SDI and SK On in terms of safety.

“I cannot say with certainty that the three battery manufacturers can guarantee 100 percent safety, but it is true that they have more competitive advantages (in terms of safety) than any other global battery manufacturer,” he said.

However, growing fears of more electric vehicle fires have weighed on battery stocks. The KRX Secondary Battery Top 10 Index fell 0.97 percent on Friday from the previous day, according to data from the Korea Exchange, although the benchmark KOSPI saw a sharp recovery of around 2 percent over the same period. The index includes shares of LG Energy Solution and Samsung SDI.

Major brokerages such as Mirae Asset Securities are in the process of revising their price targets for secondary battery stocks.