The European Union's (EU) battery passport regulation is set to reshape the competitive landscape in Europe’s battery market, potentially giving Korean manufacturers an edge over Chinese rivals with weaker supply-chain transparency, experts and industry officials said Monday.

Starting from Feb. 18, 2027, a new EU law will require batteries on the European market to carry detailed digital information covering their identity, technical characteristics, performance, durability, sustainability and recycling-related data.

The policy is designed to improve transparency across the battery’s entire life cycle, from production and use to reuse and recycling.

The upcoming rule comes at a critical time, when Korean battery firms are rapidly losing shares in the global electric vehicle (EV) battery market due to the rapid rise of Chinese manufacturers.

According to recent data by SNE Research, battery usage for EVs, plug-in hybrid electric vehicles and hybrid vehicles outside China reached 269 gigawatt-hours (GWh) in the first half of this year, up 26.3 percent from a year earlier.

However, the combined usage of three Korean battery firms — LG Energy Solution, SK On and Samsung SDI — fell 6.3 percent to 74.3 GWh. Their combined market share dropped to 27.6 percent from 37.2 percent a year earlier.

Chinese companies, meanwhile, have increased their market share. CATL remained the world's largest battery supplier outside China, with usage rising 41.7 percent to 90.5 GWh. Its market share climbed 3.6 percentage points to 33.6 percent during the same period.

BYD also posted rapid growth, with battery usage surging 67.9 percent to 28.2 GWh and its market share rising to 10.5 percent from 7.9 percent.

The figures highlight the mounting pressure on Korean manufacturers.

“The battery passport is ultimately a system that can strengthen reliability, safety and confidence in battery products and their value,” said Kim Pil-soo, a professor of automotive technology at Daelim University.

“However, from an industrial perspective, the EU is effectively raising the entry threshold for foreign companies,” Kim said. He viewed the battery passport alongside other measures, such as the Carbon Border Adjustment Mechanism, as part of Europe's efforts to tighten standards around carbon emissions and industrial supply chains.

Unlike a conventional tariff, the battery passport does not directly impose an additional charge on imported batteries. Instead, it requires manufacturers to provide extensive information about a battery's origin, production and environmental footprint.

That could create additional costs for companies with complex or opaque supply chains. Manufacturers will need reliable data from suppliers and production facilities to demonstrate compliance.

Chinese battery makers could face greater pressure if their supply chains make it harder to document the required information, according to Kim.

Industry officials said the potential advantage lies in battery firms’ European manufacturing footprint.

All three major Korean battery makers already operate production facilities in Europe. LG Energy Solution operates its Wroclaw manufacturing facility in Poland, while Samsung SDI has operated its Hungarian EV battery plant since 2018.

Samsung SDI completed its Hungarian plant in 2017 and began mass production the following year, building years of experience in European manufacturing.

SK On is also operating major EV battery manufacturing facilities in Hungary to ensure timely supplies for its European clients.

This gives Korean manufacturers an operational advantage as European customers increasingly demand locally produced and traceable batteries.

“Domestic battery companies have spent years preparing for the regulation because all three have production bases in Europe,” a battery industry source said. “Their experience with local mass production and compliance should give them an advantage over manufacturers that have limited European production experience.”

CATL, the world's largest battery maker, has also established a significant European manufacturing presence. Its German plant began serial production of lithium-ion cells in December 2022. The firm is also ready to start operation of a 100-GWh battery plant in Debrecen, Hungary, soon.

CATL and Stellantis are additionally building a 50-GWh battery plant in Zaragoza, Spain, with production designed around a carbon-neutral manufacturing model.

“However, Korean companies have accumulated more detailed know-how in European manufacturing and preparing for the battery passport policy,” the official said. “Their European production experience could still become a competitive advantage as the system takes effect, even though Chinese rivals are moving to close the gap with localized production in Europe."

The new rule could also reinforce the premium positioning of Korean batteries. If European automakers place greater value on verifiable environmental and supply-chain credentials, Korean manufacturers may be able to defend higher-value segments rather than competing with Chinese rivals purely on price, according to the official.

If the EU eventually tightens requirements on the use of locally sourced European materials or imposes stricter carbon-footprint thresholds, however, battery manufacturers could face higher procurement and production costs. That could ultimately be reflected in battery prices.

For now, however, the battery industry official did not expect the passport rule itself to trigger a dramatic jump in battery prices.

Instead, its bigger impact could be more strategic.

“The battery passport is intended to make the battery supply chain more transparent and circular. For Korean manufacturers, that means the system could function as both a compliance test and a chance to prove what they already regard as a strength: consistent quality and sophisticated manufacturing,” the official said.