Kia’s decision to use a Chinese-made ternary battery in its EV5 marks the first time the automaker has adopted a Chinese battery for a compact SUV, signaling a possible strategic shift with broader implications for the electric vehicle (EV) industry.

While Hyundai Motor Group previously used Chinese batteries in select models - such as CATL’s nickel-cobalt-manganese (NCM) batteries in the Niro EV and lithium iron phosphate (LFP) batteries in the Ray EV - these choices were largely confined to small vehicles where cost competitiveness outweighs performance demands.

The group’s PV5 purpose-built vehicle (PBV) and Kona Electric also use CATL NCM batteries, driven primarily by the economic advantages in the small SUV segment. These models, considered non-volume sellers, have posed less reputational risk for the group when adopting Chinese components.

However, the EV5’s classification as a compact SUV, a step up in both size and market influence, makes its reliance on a Chinese battery more significant. Industry experts suggest this could be a precedent-setting move, potentially opening the door to further integration of Chinese batteries in Kia and Hyundai’s larger and more mainstream EV lineups.

Mid- and full-size models such as the Kia EV6 and EV9, as well as Hyundai’s Ioniq 5 and 9, are currently equipped exclusively with SK On batteries. However, as price competition in the EV market intensifies, the presence of Chinese battery suppliers could continue to grow.

The market is already experiencing a demand plateau in EV adoption, while battery costs remain a key factor in the relatively high prices of EVs compared to internal combustion engine vehicles. Government subsidies for EVs are also being gradually reduced, further increasing pressure on automakers to secure affordable yet high-performance battery solutions.

“Hyundai didn’t simply choose CATL for cost reasons - the batteries also meet quality standards,” Daelim University professor Kim Pil-soo said. “We are likely to see Chinese batteries gradually expand from small to compact, and eventually to mid- and full-size vehicles.”

Hyundai Motor Group’s battery choices are also driven by broader strategic goals, including supply chain diversification and deeper penetration into the Chinese market. The company has consistently used Chinese batteries in models designed specifically for China, the world’s largest EV market.

A battery industry insider noted, “Because batteries account for the largest share of an EV’s cost, automakers are likely to work closely with battery makers from the design stage. That is why even when Chinese-focused models are exported or introduced in other markets, there is a high chance Chinese batteries will still be used.”

In addition, Hyundai’s need to broaden its supplier base for global EV expansion makes cooperation with Chinese battery manufacturers inevitable. A diversified supply chain is essential for cost-effective production and strategic flexibility in a rapidly evolving market.

Nonetheless, in the United States - where both regulatory barriers and public sentiment strongly oppose Chinese technology - Hyundai continues to maintain strong alliances with domestic battery makers such as LG Energy Solution and SK On, both of which already operate production facilities in the United States.

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