South Korea will provide Won38tn ($29bn) of financial support to its battery industry over the next five years to help it diversify supply chains in the face of US pressure to reduce reliance on China.

South Korea’s LG Energy Solution, Samsung SDI and SK On control nearly half the global market for electric vehicle batteries outside China, but are under growing pressure to reduce dependence on Beijing for raw materials and components.

The government will provide tax incentives, lower-rate loans and credit guarantees to help them secure minerals overseas and set up a recycling system.

Earlier this month, the US announced guidance limiting Chinese content in batteries eligible for tax credits.