S.Korea's Kia picks batteries from China's CATL for EV sold at home - media report

SEOUL, June 22 (Reuters) - South Korean automaker Kia Corp will use batteries from China's CATL in an electric vehicle (EV) to be sold domestically, a newspaper said on Wednesday, in what would be its first use of non-Korean EV batteries for local sales.

Kia, an affiliate of Hyundai Motor Co, has chosen batteries from CATL - Contemporary Amperex Technology Co Ltd - for its electric Niro crossover SUV in a move to expand its range of battery suppliers, Hankook Ilbo newspaper reported, citing an unnamed Kia official.

CATL, whose clients include Tesla Inc and Volkswagen AG, is the world's largest battery maker with a share of more than 35% of a booming global EV battery market, according to industry tracker SNE Research, a market that analysts say is worth tens of billions of dollars.

The report said the automaker also factored in cost-competitiveness when making its decision for the Niro EV, which is aimed at the middle rather than premium segment of the auto market. The newspaper didn't disclose financial or volume terms of the battery deal.

Kia and CATL officials were not immediately available for comment.

Last year, another domestic newspaper, Chosun Ilbo, reported that CATL had won a deal to supply batteries to Hyundai Motor Group, parent of Kia and Hyundai Motor Co, along with LG Energy Solution Ltd (LGES) and SK Innovation's SK On.

Analysts said Kia would be keen to lower costs for its Niro EV by using CATL batteries that are considered more cost-effective. Batteries are typically the most expensive component of EVs, making up about 30-40% of total manufacturing cost.

"This appears to be a natural course of business for South Korean automakers as they plan to boost EV sales and secure battery capacity ... relying on only a few battery suppliers could be a risk factor," said Kevin Yoo, an analyst at Daol Investment & Securities.

The Hankook Ilbo newspaper said Kia had not yet disclosed its decision to adopt CATL's batteries to its customers.

Hyundai Motor and Kia have so far only used batteries made by two South Korean firms - LGES and SK On - for electric vehicles for the South Korean market.

That duo and domestic peer Samsung SDI Co Ltd together command more than a quarter of the global EV battery market, according to SNE Research.

(Reporting by Heekyong Yang; Editing by Richard Pullin and Kenneth Maxwell)