This report comprises the results of an investigation into the  structure of the electric vehicle (EV) battery supply chain. The  structure of the EV battery supply chain has undergone a rapid  transformation, and continues to evolve even now amid a shifting  industrial landscape that reflects the effects of both the pandemic-induced supply chain crisis as well as the ongoing Fourth Industrial  Revolution (4IR).

In the first chapter we describe the scope of the research and  summarize the backdrop against which the content of the study should be understood. In the second chapter, we provide a conceptual  definition of 4IR and summarize the impact of the COVID-19 pandemic on domestic (Korean) production sites. 

In the conduct of this study, we realized that, despite high levels of  interest in 4IR among academics, government, business, and the  general public, the overall level of understanding of the phenomenon  was quite low. With this in mind, in Chapter 2 we explain in detail the  basic data and analytical methods used in the research. 

For this study, our core analysis is a tear-down (TD) analysis of each  stage and every process of battery manufacturing. As part of this, we  construct a database of: every battery model used in EVs, critical  technologies in each stage of the production process, interfirm  transaction data, and major corporate shareholders. The analysis  focuses on production stage interfirm transaction data. 

In Chapter 3, we describe the main objectives of the paper and  conduct a supply chain analysis. We also in this chapter survey in some  detail the overall landscape of the automotive sector and discuss key  industrial trends in the EV and battery markets.

We also ascertain the characteristics of the industry’s supply chain in three distinct periods. The first is the pre-4IR period that runs up to  2016. The second is the pre-pandemic period from 2016-2019. The  last is the post-pandemic era that runs up to the present. We presented  the results of this analysis as a Sankey flow diagram. The diagram  depicts movements of goods for each production stage in each of the  three periods describe above.

We then visualize the transaction structure for each stage of  production (and each period) based on network theory.

The EV market has grown rapidly since the introduction of mass  market, battery-electric automobiles in 2010. Real growth in EV  production and consumption did not get underway until 2016,  however, and the explosion of EV popularity did not occur until the  outbreak of the COVID-19 pandemic of 2019. Note that the first  growth period coincides with the start of early 4IR discussions.

We see this phenomenon as owing to three key factors: ① saturation  in the internal combustion engine (ICE) - based vehicle market, ② the  economic complexity of the automotive industry the effects of  interindustry linkages, and ③ the ways in which the industry attempted to deal with supply chain disruptions wrought by the COVID pandemic.

However, the enormous role played by China in the EV battery  industry must be noted. In terms of both scale and complexity, the  influence of China here outweighs both the second and third factors  described above, and for this reason firms involved in the battery  supply chain face significant barriers to exist. That is, it is extremely  difficult for any player in the EV battery industry to bypass or otherwise  avoid China.

We also found evidence of a regionalization phenomenon in the  industry, in which production of certain goods becomes concentrated  in groups of countries. We also noted differences in the distribution of  production stages among countries.  

The rapid growth of the EV market also raises a number of concerns. Looking at the macro ecosystem in which EVs are being adopted, we  see fossil fuel plants being used to produce the electricity that powers  these cars and major problems in recycling EV batteries.  

In Chapter 4, we identify ten major issues in the EV battery sector. Our supplementary analysis of these issues is informed by the results of  the main analysis in Chapter 3