SK Innovation to supply batteries for Mercedes hybrid car in China

South Korean battery maker SK Innovation on Monday said it would supply battery cells to a Chinese-made plug-in hybrid vehicle model that has been recommended for subsidies from Beijing.

The Mercedes Benz plug-in hybrid sedan to be built by Daimler AG's local joint venture with BAIC Group is listed among new energy vehicles recommended to receive subsidies published by China's industry ministry last Friday.

A spokeswoman for SK Innovation said, "it is the first time since 2016 that we are receiving subsidies from the Chinese government."

SK Innovation's battery plant, a joint venture with BAIC in China's eastern city of Changzhou set up to supply BAIC's premium electric brand ARCFOX, recently started production, the Chinese company said.

China scrapped its list of recommended battery suppliers in June, a decision foreign companies said could open up the world's biggest market for electric vehicle batteries.

In 2015, China published a government list of recommended battery suppliers which excluded foreign firms, effectively locking out the world's biggest market for electric vehicle batteries.

Tesla Inc said on Friday its Chinese-built Model 3 model, being built at its $2 billion factory in Shanghai, would receive state subsidies.

South Korean media citing industry sources reported on Monday that the Model 3 would use batteries made by LG Chem. LG Chem declined to comment.

Reuters reported in August that Tesla was in advanced talks with LG Chem to source batteries for vehicles to be made in its Shanghai plant.