SHANGHAI—Chinese-owned Volvo Car Group is being allowed to use high-end South Korean battery technology in vehicles it builds in China, even as Beijing strong-arms other auto makers into using Chinese batteries.
To build up its battery industry, China requires auto makers to use batteries from one of its approved suppliers if they want to be cleared to mass-produce electric cars and plug-in hybrids and to qualify for subsidies. These suppliers are all Chinese, so such global leaders as South Korea’s LG Chem Ltd. and Japan’s...